If you want to invest money in the stock market the use only the money you will not need for a living or specific purchases in the next five to ten years.
Tips for stock trading for beginners
First inform, then act
Anyone who buys a car usually does their research first and compares different products. This should also apply to the purchase of shares. Investors should never blindly rely on a value, but gather information beforehand such as reading trading broker reviews and then decide. Putting yourself under time pressure is unnecessary.
Avoid Hot Tips
There is no such thing as the ultimate stock tip. It doesn’t matter where the recommendation comes from, investors should not follow hot tips uncritically. Rather, they must form their own opinion, especially with small, unknown companies. Many course rockets have later turned out to be non-compliant.
Spread the risk
Investors are well advised to always buy stocks from different sectors and countries. This reduces the risk of price losses. Less is more. Bank customers should spread their capital across at least five but no more than ten different stocks. Private investors usually cannot monitor more values properly in the long term.
When buying and selling shares, investors should limit their orders. This is particularly important for paper from smaller companies whose shares are traded less frequently. Otherwise it can happen that, at the expense of the investor, the price shoots up when there is a buy order or plummets when there is a sell order.
Experts advise that it is best to always set a stop-loss mark when buying a share. If the price falls below this limit, the bank sells the security as determined by the investor at the price that is then determined on the stock exchange. Where a good stop-loss rate is ultimately depends on the investor’s willingness to take risks. Investors who don’t mind larger price fluctuations can choose a larger distance to the bid price. Conservative investors should set the stop-loss closer to the bid price.
Don’t lie to yourself
Investors tend not to admit mistakes and lie to themselves. They then convince themselves that their loss maker will eventually break even again. Such sentimentality can be expensive. Instead, shareholders should always check their investment decision.
Don’t get too greedy
The best price gains are useless if the investor does not realize them at some point. Waiting for prices to keep rising can be dangerous. Many brokers therefore sell part of their package after a share price has risen. A sudden drop in the price doesn’t hurt so much anymore.