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5 Stock Trading Tips That Every Beginner Should Know

5 Stock Trading Tips

On the surface, going into stock trading seems to be a lot of work. But in reality, it actually isn’t. You just have to know what you’re doing so that you will not lose a lot of money in the process and you could become the best personal stock broker.

If you are a beginner, then read through this article to find the best tips that you should know first before getting started in stock trading.

1. Get the Right Broker

The first step in stock trading for beginners is to actually get the right broker for you. A stockbroker’s job is to initiate the trade for you, so you do not have to.

Now, there are plenty of stock brokerage firms out there so be sure to research on the best ones based on the clients that they’ve served and also their pricing model.

As a beginner, it is best that you find one that has a good price-to-performance ratio. There are plenty of reviews online so better read them first before picking the right broker for you.

2. Go with ETF First

If you’re still looking to feel the rush of the stock market, then it is best that you start investing in exchange-traded funds first.

These are funds that can be traded anytime during the day and their market values can also change dynamically as well.

ETFs can provide you with an automatic diversification of stocks which means that in the event that a particular stock falls in its price, you will still have plenty of back-ups.

It has major differences with Mutual funds (its somewhat direct counterpart). Whereas ETFs can be traded at any time of the day, Mutual funds can only be sold at the end.

3. Safer Stocks is the Way to Go

When you are first dipping your toes in the stock market pond, it is wise that you go with “safer” stocks that may not provide the highest return on investment, but they are much safer that you do not lose a lot of your money.

One example of such stock would be the consumer staples stock like food and clothing. These are things that people need on a daily basis and therefore, it is always going to be valuable.

But again, treat this as somewhat of a training program. If you are risk-averse and you want to earn more profits, then you could tell your broker to invest in a more volatile but highly rewarding stock.

4. Think About the Expenses as Well

One aspect that beginners often overlook is their expenses. Stock trading can involve many upfront costs and it might be too overwhelming for novice traders.

When getting a broker, make sure to ask them about all of the costs that you’re going to pay. When doing actual trades, read the fine print as brokers are still fallible in that they can make mistakes as well.

5. Don’t Invest in Hot Stocks Until You Do Your Research

Hot stocks are those stocks that were freshly made and that they might have a higher perceived market value. Do not invest in these hot stocks until you do your research. It might be too tempting to do so, knowing that the company is promising, but if you’re going to invest on something, you have to make sure that that particular stock is going to earn you a lot of profits; not lose them.

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