Categories: Business & Finance

A Novice’s Guide For Getting To Know The Stock Market

March 24, 2016

Anyone who wants to learn about the stock market needs to realize it probably isn’t as complicated as they may believe, but is something you should take very seriously. People can make a lot of money investing in stocks, but there is also the potential to lose quite a bit. There are certain basics you should know about the stock market, and here are some tips on where to start your research.

Brokerage Firms

Most people use brokerage firms to purchase and sell stocks. The three most common types of brokerage firms are discount, full service, and online. When deciding on a type of brokerage firm, you must know your comfort level when it comes to making big decisions about investing. A full-service brokerage firm will assign one of their representatives to handle an investing account. This type of firm charges the highest commissions. A discount brokerage provides fewer services, but their commissions are considerably lower. An online brokerage firm has the lowest commissions and is the cheapest way to trade stocks. A person using this type of brokerage firm will be responsible for doing their own research and stock trades. Some online businesses like TradeZero are doing more and now offer insight on a stock’s price action and allow you to get more in depth information on each.

Investing Objective

Before anyone decides to purchase stocks, they should have a clear objective in mind for their investing. You should understand why you are investing in stocks and have a clear financial goal. If you want to have regular income provided by dividend income, for example, it’s best not to invest in risky stocks. Should a person want to make some fast cash, they probably don’t want to purchase blue chip stocks either. Take note of what your goal is and come up with defined steps for how you will reach this goal.

Analyzing Stocks

When starting your venture in the stock market, listen to the advice of a stock analyst. These are people who study the stock market and make recommendations. Some stock analysts have so much influence; they can cause a stock’s price to rise and lower. Not all recommendations by stock analysts are good though. The Securities and Exchange Commission (SEC) advises people learn how to research and analyze stocks on their own and learn how to pick stocks. This will help them know which analysts do the best job.

Long Term Investment

The stock market constantly fluctuates. It will increase and decrease sometimes a little and sometimes a lot. But the market still out-performs any other type of investment over the long term. Experts advise people start in the stock market by choosing some stocks they plan to hold onto for ten or more years. This is a good way to get real returns on an initial investment.

As a novice in investing and the stock market, use these tips to help get a handle on your first go-around. With time and experience, you can find what path works best for you.

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