Do you want to get into stock exchange? Do you want to buy stock? It is easier said than done, so read our article to find out the best practices and be aware of common mistakes you can make.
Before you start investing
A big mistake made by people starting their adventure with the stock exchange is the lack of knowledge about its functioning. Therefore, before you go to practice, take time to acquire at least general knowledge about trading in shares. Read about business cycles, bull market, bear market, rules for buying and selling shares and other issues described in books and materials for novice investors. Where to look for information on how the stock market works, what is investing in companies?
A novice investor needs to spend some time getting to know listed companies included in individual indexes and find out what messages affect the course of listing. The easiest way to get this knowledge is by keeping track of information coming from the stock exchange and the financial markets. For this purpose, you can use, for example, websites offering stock market news, together with analyst comments.
How to buy shares?
To start trading in shares you need to set up an investment account, otherwise known as a brokerage account or brokerage account. This is an account where information about your shares and transactions is saved.
Remember that futures are definitely not a good instrument for budding investors. You must be fully aware of the risks they pose. You can gain a lot in a short time, but if your actions are not in line with market movement, you can clear your account to zero in a very short time.
Especially at the beginning of your adventure with investing, you should protect yourself against the risk of unusually large declines. To do this, set up a collateral order or stop loss on your brokerage account. Thanks to this you will specify the level to which you accept losses. When buying shares you have to take into account potential losses, so always take the level to which you accept losses. Set a sales order (so-called stop loss) at a level where it will be known that your expectations regarding the share price have not come true. This will allow you to avoid very painful losses.
Being able to learn from mistakes (not just yours) is one of the key principles of investing in the stock market. Remember not to treat failure as failure. If you draw the appropriate conclusions from them and successfully do the “lesson” they carried, you will become much richer. And it’s not just about the contents of the wallet.
When you get the first experience on the stock exchange, get interested in training offered by financial companies. Very often at free meetings you can learn many things that broaden the knowledge and history of experienced brokers. Meetings are free because they are often sponsored by brokerage houses and are one of the forms of their promotion. For you, however, they can be a great opportunity to gain knowledge.