Shares trading for beginners: useful advice for the starters

Where to start trading in the stock market? At first glance, this is quite simple. But if you have never encountered trading on the exchange, then for you may seem difficult. When people start buying stocks, they didn’t even know what is needed for this. What actions should be taken? They had to look for information from various sources: a bit of everything. The problem is that for many, the information is presented in pieces, without a complete picture of the action plan from the very beginning to the first profit.

Therefore, we can show you a complete guide for successful work in the stock market. According to google, trading on the exchange is a science, but you do not need to master it completely. At least for now. A full study can take many months or even years. For the first time, it’s enough for beginners to know only the basics that will provide you with 80% success (on the principle of 80/20). Well, the rest of the knowledge that you can later study will require more severe time costs from you and do not guarantee a significant increase in profit.

The basic notion of trading for the starters

The process of starting work on the exchange is very similar to opening a deposit in a bank, and it can be reduced to 3 simple steps:

  • open a brokerage account;
  • deposit money;
  • buy stocks.

But without additional knowledge about finance and trading, you will be left to your own devices and practically act blindly, like a boat at sea without sails and navigation. Where the current will carry, there and swim. Without a clear course of what you need to do, you will seldom be able to achieve positive results in the market.

Checklist

To start trading, as mentioned above, you need to know at least the basics, specific basic knowledge. And even the development of only this knowledge will take time. Moreover, it is desirable to master them in a particular sequence, for better assimilation and understanding, and as a result of obtaining better results in terms of future trade.

Successful trading step by step

Here is a step-by-step plan elaborated by expert advisors of what you need to do to trade in the stock market successfully:

  1. First, you need to draw up your financial idea, namely, what you want to get from trading in the stock market. “Of course, profit, what else!” – the majority will answer. But profits can be obtained in different ways. This can be a completely passive income, in the form of coupons on bonds or dividends received, or profits generated from the growth of the asset’s exchange value (bought cheaply – sold expensively) due to the purchase and sale of assets. Additionally, pre-define your terms, this is called the investment horizon.
  2. Get basic knowledge about the structure of the stock market and the rules for working with it.
  3. Determine for yourself what financial instruments you will deal with: stocks, bonds, ETFs, futures or options, maybe a currency. Each of them has its pros and cons, such as simplicity, profitability, volatility, risk level, and much more. If several at once, then in what proportion will they be in your portfolio.
  4. Choose your trading style – understand what is closer to you: active trading or passive investment. Here everything will depend on your goals, free time, the ability to conduct qualitative analysis and psychology.
  5. Depending on your trading style and the volume of mutual funds, choose a suitable trading or investment strategy for you.
  6. Be sure to study the money management system. It is who is one of the most important in stock market trading (along with the chosen strategy and trading psychology). This will allow you to save capital from significant losses (up to a complete drain), increase trading efficiency and profitability and protect your assets from other negative influences, which are not a dozen in the stock market.
  7. Get familiar with the basics of technical analysis. You should be familiar with such concepts as a trend, support and resistance zones, horizontal levels, the most important reversal patterns, trend continuation.
  8. Fundamental analysis. It is primarily used for longterm investments; for shorter periods its influence on trading results is significantly reduced.
  9. Decide for yourself what stock market you will trade in: Russian, American, European. We recommend choosing favor of Russia – Moscow Exchange. Getting additional profit from the use of IIS you can guarantee to earn 20-25% of profit per year, without any risk.
  10. Choose the broker through which you will trade correctly.
  11. Conclude a broker service agreement with him, select the optimal rate based on your needs, and deposit money into the account.
  12. Install and configure the program for trading
  13. Depending on your goals (depending on your personal finance) and the chosen strategy, conduct an analysis (technical or fundamental) and select promising assets for purchase.
  14. Using the money management or money management system, determine the size of each transaction.
  15. Make your first purchase.
  16. Adhere to a previously selected strategy when trading. You should have a clear action plan – when exactly you need to buy and sell, no matter what.
  17. Enter the completed transaction in the trading journal. This will allow you to further analyze the effectiveness of your trade, identifying errors, profitability and get many other statistics (ratio of profitable and loss-making transactions, average profit per trade, maximum and minimum profitability from one transaction, on which securities you earn the most, and on which trading is not worth it, due to permanent losses).
  18. Keep a finger on the pulse of events, have access to the most relevant information. Here you can help the financial world news (television and sites). Of course, you do not need to monitor them regularly, but you need to have a general idea of what is happening in the world at the moment.
  19. Periodically analyze your financial results which you can (and even need) to make adjustments to your trading strategy or even completely change it with disappointing indicators.
Efficiency esteem

Engaged in active trading and making transactions several times a week, constantly monitoring the market situation, the trader earned 25% of profit during the year. It seems to be excellent. But if you compare with the market, which also grew by 25% over the year, a disappointing result is obtained. Instead of just buying assets once and holding them, the trader spent his time, nerves, always risking in the hope of making money. And the result is the same.

Therefore, to assess the effectiveness of your trade, first of all, compare the results with the overall growth of the market in which you are trading.

Dowmarkets as a suitable option for starters

Dowmarkets was established by the international financial holding company Strategy One Ltd in 2008. For more than ten years, this forex broker has been providing its services in the global financial markets. Also, the company monitors trends in the field of trading. For example, the growing popularity of cryptocurrency, due to frequent changes in the exchange rate, has turned this market into highly profitable assets for trading. Anyone can register on the company’s website and join the digital money trading.

Conditions of trading with Dowmarkets

In addition to crypto-assets, Dowmarkets provides the ability to:

  • trade on forex;
  • invest in currency pairs;
  • invest in stocks of various companies;
  • work with goods and indices.

The broker provides customers with simplified conditions for depositing and withdrawing money, zeroing monthly fees, and commissions for operations. The company has a team of top professionals providing round-the-clock support to its users. Resource servers also operate around the clock with the maximum degree of data protection. Don’t miss a chance to try Dowmarkets. You will be able to earn small or big money even after retirement.

The platform’s interface

The design of maxitrade.com is not as proud as that of other brokers, but it is quite informative, simple, and ergonomic. To find information that interests the user is not demanding. For newcomers to trading and those wishing to increase their trading skills in the financial markets, Dowmarkets created the “Academy of Trading.”

According to a unique training system, clients can plunge into all aspects of trading science and, subsequently, in practice, receive their first profit (training in Forex trading). Moreover, each new lesson is a new section on the study and acquisition of skills of trading strategies and trading (investing) tactics, features of trading tools

Online education

The company practices regular online webinars where experienced speculators share their skills with everyone. By taking part in the discussions, you can get answers to questions regarding the nuances of trading. New analytical reviews from professional experts regularly appear on the broker’s website. With regards to trade, the minimum deposit amount is $ 250. There are no restrictions on deposit replenishment. Dowmarkets has provided various types of accounts for any budget and profiteering level of professionalism.

Efficient strategies of trading

The stock market has been around for a long time. Therefore, there are well-known methods, and almost all individual traders use methods tin shares trading for beginners hat. Another thing is that in each case, it is necessary to use different techniques and different strategies. But then a list of the most effective strategy that will achieve success in stock trading will be presented.

Investment during the decrease

This means that in a permanent state of decreasing profit, all investors sell shares, and then, when the value of these shares decreases, they buy them and again increase the market price of the shares. A reasonably popular method is when an inevitable artificial panic is created for a specific block of shares, and then a stable condition is established in the market, and the value of shares increases significantly.

Long-term strategy of investment in the company’s assets

An investor invests in assets that currently do not have high value but presumably have a growth prospect. In this case, you can only get income in a very long term, since assets increase value only after years, decades.

But here there is a soy feature: it is necessary to correctly assess the prospects of these assets and determine when their value will be minimal.

Otherwise, you can not understand and not guess, lose, because this indicator is not

Different types of investors

Considering the issue of trading shares on the stock exchange, it should be said that some trade in securities and earn their minimum by reselling shares, and some research the process profoundly, invest in shares and earn on them only by increasing the nominal value of the company. So the first market entities are called traders. And the second – by investors. The former is aimed exclusively at resale, while the others allow the possibility of not only sales but also long-term preservation of assets.

Classification

Classification of investors in the stock market:

  • Short-term investors. They are characterized by the fact that they buy securities and other assets on the exchange only for a few days or weeks. Their task is to sell assets at a price higher than the acquisition. Such assets do not remain in the ownership of the entity;
  • Medium-term investors. Such investors are characterized by the fact that they buy stocks for up to one year. Then the shares are sold;
  • Long-term investors. Consequently, they buy assets and securities for more than one year. And then, based on the analysis, they decide on whether or not to sell the shares.

Depending on what category the investor relates to, it also uses different methods of analysis. For example, short-term investors work exclusively with the terms of reference, and now medium-term and long-term investors work not only with the technical parameters of assets, but also with the fundamentals of fundamental analysis.

But not only investors have their classification. Securities and asset traders also have their rating.

Different types of traders

Classification of stock market traders:

  • Day traders. They work quickly, even with lightning speed. Earn on minute price fluctuations.
  • Swing traders. They work based on fluctuations in the prices of securities. As a rule, they acquire securities, hold them in their portfolio for several days or weeks, and then, at a favorable time, sell them;
  • Scalpers. The so-called speculators, who immediately, buying assets, put them up for sale and earn solely based on the established allowance.

The only good news is that each market player trades differently and makes an independent decision about who he wants to be at the moment. The same market player can be a long-term investor in one asset, and a swing trader in others. There are no restrictions. Anyway, don’t forget about insurance and possible risks.

Making the best choice

And here the question arises of which is better to choose: long-term investment or short-term trading? We note right away that it is the long-term investment that has the least risks, which sooner or later, if it does not make a profit, then at least pay back the investments taking into account the price index. Long-term trade and investment can be predicted, and they are subject to fewer market fluctuations.

If you consider yourself one who is willing to take risks, and the invested amount is not something important and critical for you, then you can try short-term trading. But here it is essential to accept the fact: that the risks are high, at the initial stage, the losses will be significant, and the profit may not be received at all. In the case of short-term investment, it is always necessary to have a particular stock of funds that will allow replenishing stocks of securities daily.

How much time does it take

Another question that most potential investors care about is: how much time will be spent on the trading process? The problem is relevant, because many successful investors are people working on trading platforms additionally from their central place of work, so they cannot devote all the time to this process. How to trade stocks

And here, your small business depends on what role the investor and trader choose: to invest in long-term assets or short-term ones, for example, acting as a scalper. If money is invested in long-term securities, then it is enough to look at the exchange once a week or a couple of times a month and monitor the situation (make the technical analysis). Recall that many exchanges allow you to automatically set the rate of return that a trader wants to receive. If it is achieved by changing the value of securities, the shares will be automatically sold, and the trader will receive a fixed amount of margin.

If we are talking about short-term trading, then this process needs to be devoted to a whole day of work, since you will have to keep track of minute fluctuations in stock prices, sell or buy securities at an affordable and favorable price.

Three strategies to be chosen

Thus, we can conclude that each market player can select one of three approaches:

  • Active. An active strategy is one that involves the daily activities of market players through short-term work and profit. Invest money to generate income from the resale of assets.
  • Portfolio. The portfolio is called an exceptionally long-term strategy, when a trader works for prospects and invests in securities that can only bring profit in the future
  • Mixed. It is characterized by diversification of the investment portfolio when the investor works depending on personal circumstances and the nature of the stock

Your choice from the options offered depends on the situation.

Conclusion

To successfully trade shares on the online stock exchange, it is not enough to have money and desire. One of the essential steps for success is thorough preparation, including theoretical training. It is necessary to learn about the features of the stock market to understand the concepts of the most successful traders. Without a speculative basis, it is challenging to begin practical work, since, in the process of work, it is necessary to understand what is happening, what critical operations mean, etc. There are many good books and recommendations on the Internet.

After the theoretical basis, it is necessary to competently approach the choice of a trader represented in the country. You must choose a trusted and reliable intermediary who will allow you to earn money without even leaving home.

And after that, move on to trade and be ready to invest. We wish you a successful start!

Posted: 2.07.2020 | Ludmiła Gorodnichenko
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