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
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| 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.References:
