The stock market, for the wise investor, can prove to be very lucrative, but the transition from being an outsider of the market to one who understands the intricate nature of trading can be a tough one. Information is the most valuable asset in trading stocks. If you take the time to familiarize yourself with all of the mediums recognized for providing current stock information, and study how the market works, you can be well on your way to making a killing in the stock market. Here are some things you should consider before getting started.
Decide on a market. Many new investors do not even know that there is more than one stock exchange. There is the New York Stock Exchange (NYSE), the American Stock Exchange (AMSE), and the foreign exchange market, which is best for day trading. Research the available markets and identify the one that best fits your interests.
Do thorough research on listed companies. Take the time to analyze one stock at a time. Search for undervalued companies headed by executives with long running track records of success. Search for stocks with high trade volume but low cost per share. Normally these types of stocks are rare and hard to come by, but there tends to be more of them during an economic recession. Sites like E-Trade and Sharebuilder provide simple tools for first-time investors to do research on a wide range of stocks. Google Finance is also an invaluable source for getting quotes on particular stocks.
Follow the news. Usually when a story breaks that puts a company in a bad light, the stock falls significantly and the company is undervalued on the market. Pay attention to press releases, news broadcasts, and blogs that report negative developments involving certain corporations, and then capitalize on the brief dip in the market. Study quarterly and annual reports as well as registration statements, looking for trends and opportunities
Invest consistently. The key to making money in the stock market is taking advantage of dollar cost averaging. This means you decide on a specified amount to invest each month in your favorite stock, or stocks, and you buy however many shares a month this amount will afford you regardless of your stock's position in the market. The way this works is that whether you invest when the stock is down and when your stock is up, as your investing in a winning progressive corporation your investment will increase over time.
Register for an account on Sharebuilder, E-Trade, Ameritrade, or another online trading site. These sites provide a wide range of deals on trades that make using a traditional brokerage firm out of the question. For example, Sharebuilder allows you to trade stock immediately for $9.95 or to trade stocks monthly for a $4 a trade rate. You can make trades by routing money directly from your bank account for up to a few thousand dollars in emergency cases when you haven't pre-deposited funds into your money market account.
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