In the olden days, people used to hide their money under their mattress. Those days are gone. We work hard for our money. Now our money should be working for us. Savings accounts, and term deposits yield some interest, but there are better ways to make your money work for you. Stock trading not only sounds impressive, but can yield impressive results as well. In today's information age, it is easier than people think to start trading stocks. There are so many books out there to educate beginner investors prior to trading stocks. If people don't want to spend money buying books, then there are other free resources available online to educate you. Brokers have also made it really easy for people to apply for a brokerage account, and start trading within a few days.
When you buy a stock, you are becoming part owner of the stock's company. You don't necessarily have the power to drive the direction of the company, or make executive decisions for the company, but are entitled to its profits in the form of dividends.
The most important aspect about stock trading is risk. Remember, there are no guarantees when it comes to owning stocks. Stock prices can go up, but they can also go down. You can make money as easily as you can lose money. Some people would argue it is easier to lose money than make money. This is true, as 90% of traders lose money on the stock, and foreign exchange. To lower the risk of losing money in the stock market, traders can diversify their portfolio. Never put all your money into one stock. Not only is this a bad idea from a diversification perspective, but also a bad money management strategy. Try to trade stocks in different areas, and spread the risk around.
There are a wide variety of stocks to choose from. Beginner investors can often feel overwhelmed by the choices and options available. It is often best to steer clear of penny stocks at first. They can be tempting, as the idea that they can triple, or quadruple overnight may be too much to resist. And with a small amount of money, a new trader can own a significant number of stocks, compared to an established company. However, these companies can be more volatile, and unpredictable. For beginners, it's best to stick to blue chip stocks. The bigger companies are more well known, and stable. If you cannot afford to buy stocks in blue chip companies, maybe you shouldn't be stock trading. You should only be trading using money you can afford to lose. If the you lost all your investment, run the risk of financial problems, you should steer clear of stock trading until later on.
Stock Trading is a risky business. Remember to arm yourself with as much ammo as you can before joining the battle. The best ammo is knowledge. Good luck with all your future trades.