Many of us know the cult film “The Wolf of Wall Street” with Leonardo di Caprio in the lead role. Where an efficient broker knows how to start investing in stocks at the moment. In this article, I will try to bring you closer to what investing in the stock market is all about, what mistakes you should avoid at the beginning, and what rules you should follow when investing.
How to start investing in stocks, or how to prepare to be a trader?
In practice, investing in the stock market is a difficult art. It consists not only in knowing the importance of stock charts, but also in properly understanding a given market. And this is the first point that, unfortunately, hardly anyone pays attention to. In the film The Wolf of Wall Street, the main character learns that brokers know the least. And there is a pinch of truth in this, because no one can predict with 100% certainty what will happen to share prices. They will decrease, increase, or maybe start spinning in circles, paraphrasing a movie quote.
However, we can reduce the risk of a bad investment by gathering relevant information about the market in question. As Warren Buffet says, “Risk comes from not knowing what you’re doing.” Not knowing anything about a given market, we are actually playing a sapper, either we hit the bomb or not. At the same time, you should refrain from analyzing each company and changes in its share price.
Because their number is simply too large. It is better to follow the forecasts and listen to the information provided in the media about a specific market or stock market position. The stock market is like a living organism, it is constantly changing, but when analyzing a given market, we will certainly find some dependencies. One example is the statistically recurring increase in the share prices of courier companies during the holiday season, which is related to the tradition of buying gifts.
Find the right broker when you start investing in stocks
There are many brokerage houses in the world that offer their services. Offers and tools can differ dramatically from each other, which is why it is so important to choose the right offer for your expectations. We should be interested in the investment platform working efficiently, i.e.:
- Processed transactions quickly,
- It was resistant to failures and technical breaks,
- It had a well-tailored offer to our needs.
A very important factor is also the amount of fees for ordering a transaction, here the rule is simple: the lower the price for opening and closing the order, the better.
Use chart analysis to make investing in stocks on the stock market easier
A chart is your best friend when investing, and you can read a lot of useful information from it. Many beginner traders look at the chart, paying attention to one thing. Is the chart going up or down? And this is also important information, but it is not the only most important one.
In the context of how to start investing in stocks, a fuller understanding of charts allows you to make forecasts and catch trends. The principle is very simple, you have to catch an uptrend, enter it and exit at the right time by closing the contract. If you can apply this principle, you will make money on stocks by investing both long and short. Not analyzing the chart is a serious mistake that can make you lose your money.
First of all, don’t lose money and keep a cool head
An old wise Jewish maxim says “never lose money”. Does it sound trivial when answering the question of how to start investing in shares? Perhaps, but it carries a lot of wisdom. Not every investment is accurate, sometimes it may turn out that our goal was wrong. In this case, it is important to keep a cool head and consistently implement the developed investment strategy. If you invest on time on a monthly basis, try to summarize your investments in a given month.
If you are short-term, analyze whether, for example, at the end of the day you came out in the black. The crux of the whole thing is that at the time when you were investing, come out in the black or at zero, but try to never go into the red. Sometimes it doesn’t work, there are various cases why stocks that suddenly cost $500 suddenly fell to $100. The trick is to grit your teeth and continue to implement the plan than to build a new strategy every now and then.
You don’t chase the tram and the share price
The above quote belongs to one of the best stock market investors, André Kostolany, and it has a lot of hidden meaning. When we invest in the stock market, we are waiting for a convenient opportunity. If you have missed the convenient course, take a deep breath and control your emotions. Stock markets do not stand still, and the price that has just escaped you in a moment may reappear. Like a tram that has left and will soon return to the stop. All you have to do is stay calm and wait for new opportunities.
When deciding to invest in the stock market, we must bear in mind that our investments will not be right away, just like with training sports, the more and longer you train, the better you are. So there is no need to break down and get nervous, because everyone can make money on the stock market, they just need to develop the right habits and learn about investing.