Don’t Start Share Trading Until You’ve Learned The Basics
The fastest way to learn about share trading is talk with experts. Normally, this is difficult for beginners but now you can easily access share trading experts by enrolling in courses like Stock Market for Beginners Learn to Trade. This course will teach you how the stock market works, how to invest in stocks, and, most importantly, how to make money. Like all of the courses mentioned in this article, this course is led by an expert in share trading and, of course, share trading tips.
Master The Basics
Spend time learning all you can about share trading before you even thinking about trying your hand (and investing your hard-earned money) in more advanced trading activities.
As well as learning everything you can about share trading, invest your time into learning about accounting and reading financial statements. If you haven’t already done so, subscribe to financial news services and start monitoring the financial markets on a daily basis. You’ll see how economic reports and other news impact the financial markets.
Familiarize Yourself With Share Trading Terms
Share trading terms may at first seem like a foreign language but you’ll soon pick them up. For example, you’ll need to understand the difference between bid price, offer price, spread, and mid price:
- The bid price is the price at which shares can be sold
- The offer price is the price at which shares can be bought
- The spread is the difference between the bid price and the offer price
- The mid price is the price midway between the bid price and offer price.
Get Used To Stock Symbols
The first time you look at a list of traded companies, you may be surprised to see that they are not listed by their full name but a short symbol (of between three and four characters). For example, you might see a headline, “NASDAQ’s Most Active Stocks” followed by a list that says, “FB, INTC, FOXA, and TSLA.”
What do FB, INTC, FOXA, and TSLA mean?
FB is Facebook; INTC is Intel Corporation; FOXA is Twenty-First Century Fox, Inc.; and TSLA is Tesla Motors, Inc. That’s how they are listed on share markets.
Shop Around For A Broker
With so many brokers to choose from, there’s no need to settle on the first brokerage company you find online. Do your research. Ask other investors on forums. Read up about brokerage companies.vMost brokerage companies will offer special deals to lure in investors. Take advantage of these special deals.
Only Choose A Qualified Broker: There are many scammers and charlatans on the lookout for naive investors willing to hand over their money. Protect yourself by only choosing to do business with brokers who are qualified to trade equities. Also check out the broker’s track record over at least five years.
Be Wary Of Hidden Charges: Make sure the broker you choose informs you of all possible charges.
Try More Than One Broker: Compare the services brokers offer by opening accounts with two or more brokerage companies.
Research Before You Buy
We don’t recommend you buy shares just because you see on a bulletin board, forum or in your favorite newspaper that ‘XYZ’ stock is tipped to double in value. Always question the source of the advice. Is it from someone with a trusted reputation? Does the source have a successful track record in share trading tips?
Research, Research, Research: Use due diligence before you invest.
- Find out what the company has been up to in the past few years and what it intends to do. What new products or services is it planning to launch? What do commentators think of these new products or services? Is there likely to be a demand for the new products or services? How will they stack up against other such products and services? What’s the long-term outlook for such products and services?
- What competition does the company have? How does it compare with the competition?
- Read the company’s annual reports. Look in particular at its debt or borrowings and compare that figure with the company’s last reported pre-tax profits. Multiply the pre-tax profits by three. If the debt is still larger than that figure, it may be one to avoid. Look too at things like the Price-Earnings Ratio, Price-To-Sales Ratio, and Price/Book Value ratio.
- Look at the company’s website. Read through its press releases and news sections.
- Check out its reputation online and offline.
- How does the company handle customer service?
- Has the company been involved in any lawsuits?
- How does the company treat its employees?
- Is the company considered a market leader? Are its employees perceived as thought leaders?
- Read about the industry or sector the company is involved in. What is happening within that sector on a regional, national, and international basis? What new regulations or laws are likely to be introduced in that sector? What impact will those regulations or laws have on the sector and the company you’re considering investing in?
Keep updated about the company even after you’ve made the investment in its shares. You need to be vigilant for changes within the company and in the market it operates in that could affect the price of your shares – either positively or negatively.
Look For Red Flags
Give shares in companies that only have one product or service a wide berth. That’s because if the demand for the company’s one product or service drops away, the value of the shares in the company will most likely take a nose-dive too. Similarly, keep away from shares whose value is dropping. Trying to work out when the bottom has been reached on a falling share price is risky business. It’s better to be conservative rather than impulsive in your share trading investments.
Avoid Get Quick Rich Schemes and Systems
Scammers are always on the lookout for victims ready to buy into their Get Rick Quick Schemes or Systems. Their ads are everywhere online and offline. Some scammers may even call you. Don’t be fooled: if something sounds too good to be true, it probably is. Don’t take the bait! Be suspicious of ads, phone calls, or emails that contain offers of software systems, share systems, research documents, newsletters, and advice.
Don’t Buy Shares In A Company Immediately After A Profit Warning
The profit warning is a heads-up for the market and prospective investors like you that the company’s earnings are not going to meet the market’s expectations.
Spread Your Risk
Share trading tips number 13 is to invest in different sectors or industries in the share market rather just focusing all your investments in one sector like banks. This will give you a buffer against a sudden downward swing in one sector.
Plan Your Exit Strategy (And Stick To It!)
Knowing when to abandon ship and sell up is just as critical as knowing what shares to buy. Many new and even experienced investors don’t know when to sell their falling stock. Too often, they do nothing. So don’t let emotions rule your head when it comes to your share portfolio. Be clear that you bought the share to sell at some time in the future for a profit. So plan your exit strategy (when you will sell the shares) just as carefully as you plan your investment strategy.
For example, you could decide that you’ll sell when the share falls 25% below its high. Let’s say you buy stocks at $50 and they soar to $100 before starting to tumble. Rather than wait to see what happens, plan to sell when it dips 25% below its most recent high – so in this example, at $75. No dithering or debate: just sell once it hits the $75 mark.
Only Invest What You Can Afford To Lose
Share trading carries risks. A sharp downward movement can wipe out the value of your shares in minutes, which is why you should only ever invest money that you’re comfortable losing. Of course, you can also make thousands, tens of thousands, and even more with share trading once you know what you’re doing. And that’s why it makes huge sense to invest your time in learning from experts in share trading before you start investing your money.
For more real insider’s secrets, like how to choose stocks, how to read share market charts, and how to make money on the share market, book your place on Stock Market for Beginners Learn to Trade or any one of the following courses:
- How to invest in the stock market. This course introduces you to buying stocks and stock analysis. You’ll learn how to find a brokerage as well as more advanced stock market trading steps such as how to read financial statements.
- The 5-Step-Trading® Stocks Series I + Workbook is aimed mostly at beginners, and will give you a solid grounding for trading and investing in the stock market. The 5-Step-Trading® Stocks Series II Trading Education For All digs deeper into the material you learned in Series 1 and introduces new concepts and new ideas, including the mistakes that most traders and investors make that stop them making money.
- Foundations of Stock Market Trading | Trade Like the Pros reveals how professionals scan the market for stocks, the best times to trade, and how to read share charts plus looks at the free resources you can use to get started.
- The Survivor’s Guide to Trading Penny Stocks provides a step-by-step guide to trading Penny Stocks.
- A Beginners Guide to Technical Analysis of Stock Charts reveals how to read stock charts quickly and correctly.