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How to Trade Stocks

By Edited Nov 3, 2016 0 0

Ever wonder how some people make a living off of stock trading? It's not as hard as you think! In fact, you can make a considerable amount of money within weeks with as little as $500! A lot more profitable than leaving that money in the bank...

Things You Will Need

- A computer with a decent internet connection
- An online stock brokerage account
- Patience and determination

Step 1

The first thing you will need before trading stocks is a brokerage account. You can choose any online brokerage, depending on your specific needs and/or specifications. A few examples are Etrade, Sharebuilder, Fidelity, TD Ameritrade, Scottrade, etc. Visit their respective websites to view their prices, requirements, etc. Some brokerages will require a minimum account balance as well as maintenance fees and a few other things, while some will not. Be sure to check for these things before opening an account. Once you do open an account, be sure to follow their instructions on how to deposit money into your new account so that you can start trading.

Step 2

Once your account is set up and ready to go, you will have to determine what stock you would want to purchase. Typically, bigger stocks like Apple, Google, JP Morgan Chase, McDonalds, IBM, etc. will be a lot safer to invest in, but it will be more expensive to purchase. Smaller stocks are cheaper, but it comes with a higher risk due to higher volatility. This step is important because the stock(s) you choose will determine if you will make money or not. Throughly research the stock you're interested in purchasing. Flip through its charts, check the news for any information regarding the stock or the company it represents, read its quarterly financial reports, etc.

Step 3

U.S. stock markets are open Monday-Friday, from 9:30 AM to 4:00 PM EST. That's when you will buy or sell stocks. There is pre-market and after-market trading before and beyond the normal market hours, but I advise that you refrain from trading during those periods, as spreads are much larger, and volatility is very high. If you've done your research, you should have a grasp of the price of the stock in question; basically, you should pretty much know if the stock is currently underpriced, overpriced, or fair, etc. You obviously should not purchase the stock if it's overpriced, but if it's undervalued or fair, then you should definitely consider purchasing it.

Step 4

You should sell the stock(s) that you've purchased once you feel that the price of the stock(s) is nearing its peak (aka becoming overpriced), because it'll most likely start moving down. It's advisable that you keep an eye on your stock(s) frequently. Just in case you don't have time or you don't have access to the internet, it's always best to keep a limit/stop-loss order. Most brokerages will have this option; it allows you to sell your stock(s) when it reaches a specified price that you can personally set. When it reaches your specified price, the stock(s) will sell automatically, even if you're not online or at your computer! A lot of people think that they can only own stocks through an investment bank or through a stock broker. That used to be the case, but with the emergence of online brokerages, you can trade stocks yourself, without having to pay high fees or trusting your money to a stranger. Yes, it has its risks, but its potential benefits make stock trading very attractive.

Tips & Warnings

- While you have potential to make a lot of money, it is also definitely possible that you may lose your money when investing.
- Stocks and other securities are not insured nor guaranteed. Never trade with more money than you can afford.
- This guide was meant to help people with no prior knowledge in stock trading. I am not recommending that you open an account with, or buy any of the stocks listed as examples in this article.
- Trade at your own risk; I will not be responsible for any loss you may incur.
- Always remember, even the smallest gain is better than a loss of any amount. Don't be discouraged with small gains. It'll add up eventually.

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