How To Buy Stocks : Best Tips For Beginners (Most Read)

These simple tips give you basic ideas, which are required while you buy your first stock and want to involve stock market for long run.

How To Buy Stocks: Beginner Guide

How to buy stocks :  Basic tips

1. Define your purpose

Yes of course the main purpose of buying stock is to make money. This is the answer of general stock buyers. But if you want to be successful, define your purpose beyond than making money. For example, say I want to hold the stock of this company for 10 years. I want to buy this company's stock because management and product of this company is awesome. If you clearly say your purpose then you are really a next potential one of the good investors.

2. Know basic terminology

Investment is one of the technical subjects itself and now days it is becoming more technical. So one of your first task is to understand basic terminologies of Investment.
  • What is stock, bond and other market securities?
  • What is an IPO and secondary market?
  • Types of broker commission, capital gain. 

3. Know market indices

Suggested material available in you should know and references sections.
Example of market indices: Dow Jones Industrial Average (DIJA), S&P 500 Index, Nasdaq composite Index.

4. Know stock exchange

Suggested material available in you should know and references sections.
Example of stock exchanges: NYSE, NASDAQ.

5. Know basic rule of games

Investing in stocks is like playing a game. And you should know the basic pictures of game. There are rules, disciplines, time frame, practice, score, opponents (in stock game, the main opponent is your fear and grief). And there is a coach. Here coach means your mentor, who provides you with advice and guidance.

6. Do basic homework

This blog recommends you to collect performance of particular stock ( you can pick any one, it is better if you pick from your industry, historical data are easily available). Then use white paper and pencil and make a hand made graph, charts, point out high-low point, make candle and later after 2-3 weeks, you will be in the state of using stock trading software. These types of homework encourage you to know better.

7. Understand basic strategy

Basically there are two types of stock buying strategies.
1. Fundamental strategy: Where buyers buy and hold stocks for long runs. Good example is Warren Buffett.
2. Technical strategy: Where buyers buy and settle their position with in few days. 
and now
3. Mix strategy: this is the combination practices of above two strategies. Where stock buyers use some portfolio for fundamental strategy and some for technical strategy.

8. Your portfolio mechanism

Make your own  portfolio. In the beginning, choose 2 or 3 types of stock and invest few amounts.  After you gain basic experience you can use complex combination of your portfolio.

9. Be clear about your broker

You can directly buy a stock but going through a broker make easy. There are different types of brokers for example full service broker, discount broker, and online broker. Choose right broker for you.  How to choose a right broker is crucial. The best answer is gain practical knowledge for some week with your friend who is active in stock market. If this option is not available then do your research read book, use internet.