How To Buy Stocks: Basic Do’s And Don’ts

If you are asking how to buy stocks, then you must be somehow interested in joining the securities exchange market, aka stock market. The world of high finance revolves around major flows of commodities and money, but even the ordinary person can get a hand in the pot, with a bit of capital.

Of course, whether the individual will make a profit is entirely dependent on his skill and luck. But we may be getting ahead of ourselves. Let’s get back to square one and set off from there.

Day Trading Advice

As a prospective day trader or a trader on longer terms of engagement, the first thing you will want to do is to set aside money. This money should be something you can afford to lose – sure, it will hurt to lose it, but losing it will not cripple your life.

That is because majority of individual investors stand to make losses in the securities exchange. The stock market is not a gold mine instead it is a roulette table where fortunes can change in minutes and seconds. Make sure you can survive even after losing the money.

Next is setting up a trading account. That means looking for a stock brokering firm that will accept your capital. Some discount brokerages will accept as low as USD2500 for a margin account, while others will set the minimum higher. More importantly, you will want to be able to do trading online, so you can cut out the latency involved in calling up your broker for buying and selling. Market regulators are looking to increase the minimum though, so move quickly.

Before engaging in any online transactions, make sure you have a secure connection. At the very least, you should enable your browser’s secure transmission capabilities, like SSL. You can do more than just that though. If you are on a wireless network, use encryption and set a password on your network.

As much as possible, conduct your online transactions from just one computer. Also, clear your browser’s temporary information cache after each use, or use private browsing sessions so you won’t forget.

Securing a Solid Stock Position

Once you’ve secured your position, you can actually get to buying stocks. One mistake you will want to avoid is to join a buying rush heedlessly. Sometimes these rushes are caused by hype, and thus they could crash easily. Make sure you know the tricks of how to read and interpret stock charts so you can see if buying is justified or just a lemming rush.

It is a simple thing to buy stocks, but buying stocks and gaining a profit from selling them is no simple task. You need to know how to read stock charts and how to analyze trends and predict future price movements. Taking a class online is recommended to develop these skills. Strategy development will be up to you, though if you know a successful trader you might want to ask for advice or if you could sit in on a trading session of his or hers.