A Beginners Guide to Share and Stock Trading

Do you ever feel like you could be adept at making a handsome profit through trading stocks and shares? Perhaps you are looking for a more profitable way to earn returns on your capital and would like to invest in stocks rather than keeping all your money in a savings account with low interest rates. Trading in shares can be a viable way to earn a good return on your hard earned money provided you know what you’re doing and invest wisely. As such check out the beginners guide to share and stock trading below for more information on how to get started.

What are Shares and Stocks?

Shares are basically ownership units of a company divided into parts of equal value usually offered by companies as a way to raise funds. Investors buy these stocks in the belief that a company will do well, increase its value and therefore ‘share’ in its success.

How Do I Get Started in Share Trading?

In the past, trading in shares and stocks required a lot more effort as well as intermediaries who handled everything for you and therefore took a cut of your earnings in return. Thanks to advances in technology however, anyone can start trading immediately using an online account. Many dealers also offer stock trading by phone and there are fees associated with every transaction whether the trade is carried out online or over the phone.

In addition, there are now many trading platforms that offer stock trading through smartphone apps and little or no fees although it’s best to do your due diligence into a service before signing up.

What do I have to do?

Once you’re signed up and ready to trade, with most platforms all you have to do is simply select the stock name you want and its price will be quoted for you, normally in cents per share. It’s worth noting that such accounts usually give you access to shares in established companies trading on major stock exchanges. Such stocks are more costly per share and can limit the number you can buy. A more affordable option is trading penny stocks although these may not be available on regular platforms as they are shares in up and coming companies, or those going through a downturn in fortunes.

Always Spread your Risk

Trading in stocks and shares is a risky pursuit that should be approached with respect and care. This includes carrying out extensive research and due diligence in any company whose shares you’re interested in buying, as well as diversifying your portfolio. Spreading your risk protects you from the possibility of losing all your money in one go should things go south with your investment. In this case your other stocks can therefore insulate you against any losses and allow you to continue trading.

Educate Yourself in the World of Stock Trading

Finally, if you’re new to share and stock trading then there is no better way to prepare yourself than learning all you can about the industry. There are many resources available from which to learn more about trading in stocks, including books, following the markets on the news, in newspapers, and online. You could also opt to take classes in share trading or attend seminars as well as studying the work of stock market greats in order to improve your knowledge.

Stock and share trading is by no means a get rich quick scheme and as the guide above shows, will require a lot of application, research, and learning in order for you to be successful. However, with interest rates on savings accounts at a historic low for savers, trading in stocks and shares is a good way to get a better return on your investments.

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