Stock Trading and Investing 101

May 5, 2020
Stock trading and investing offers an alternative way of acquiring wealth. However, it requires hard work to realize long-term as well as lasting success in this field.
Stock Trading and Investing 101

It is never too late to begin your stock trading and investing venture in the UK. With the help of this Stock Trading and Investing 101 guide, you will be able to learn and understand the stock market and the best investing techniques that you can implement in buying or selling of stocks. Stock trading and investing offers an alternative way of acquiring wealth. However, it requires hard work to realize long-term as well as lasting success in this field.

To begin with, you will have to decide the most suitable stock investments to make. Next, you will be needed to open a brokerage account. Then, you will have to search for the right stocks to purchase and monitor the market trends closely.

How to Convert GBP to USD and GBP to EUR

The conversion of one currency to another varies depending on the prevailing conditions and exchange rates in the market at a period. Therefore, there are no specific rates since the prices are volatile. However, generally, you can easily convert GBP to USD and GBP to EUR.

For instance, currently, a single British pound is exchanged at a rate of 1.2075 USD. Therefore, if you have 50 GBP, you will get 50 X 1.2075 = 60.375 USD.

On the other hand, if one British pound is exchanged at the rate of 1.1404 EUR, therefore exchanging 50 GBP will give you 50 X 1.1404 = 57.02 EUR.

For new investors looking to find and learn the best stock trading and investing basics, here are the common questions and their answers:

  • What is the difference between trading and investing?
  • What is the amount of money one needs to start stock trading and investing?
  • What are the various stock trading and investing strategies?
  • When is the right time to purchase stocks?
  • When is the right time to sell stocks?
  • What are the Best Stocks to Buy?

1. What is the Difference Between Trading and Investing?

profit calculatorStock investment implies when an investor buys stocks and holds onto them for a more extended period, whereas stock trading implies when an investor buys shares and resells them as quickly as possible to make a profit. However, as stated by Warren Buffett, any novice investor should not attempt purchasing and selling stocks in terms of hours or days. Instead, buy your stocks and hold for a more extended period because this way you would be successful in the long-run.

2. What is the Amount of Money One Needs to Start Stock Trading and Investing?

Whereas the majority of the discount brokerage companies allow investors to open a trading account with a low deposit amount, the right thing to do is to begin a stock trading and investing with a $1,000 investment amount that you can afford to lose in case things don’t work out on your favour. Novice traders and investors must understand that the market is highly dynamic and therefore, they must not invest money they are not ready to part with in stock trading and investing.

3. What are the Various Stock Trading and Investing Strategies?

There are plenty of stock trading and investing strategies that can be used while purchasing and selling shares. However, the two key strategies that novice investors can use include active and passive stock management.

In passive management, traders invest in mutual finance as well as exchange-traded finances, that reflect market index funds, like the S&P 500 Index or the Dow Jones Average.

Broader market indices are often less dynamic as compared to purchasing individual stocks due to its diversity. Another benefit of passive management strategy involves its low fees in comparison with active management strategy.

On the other hand, an active management strategy is whereby individual shares are selected to outperform the market. The critical thing here is that the profits are unknown, and volatility is an obvious risk.

Another stock trading and investing strategy for an investor is to have a mix of both the active and passive management strategies an investment portfolio. Traders ought to focus on the fees while at the same time, selecting mutual financing.

However, any investor, even the savviest, at some point, are disappointed by the high volatility of the stock trading and investing market. Thus, no specific strategy can guarantee a profit.

4. When is the Right Time to Purchase Stocks?

pivot point calculatorDifferentiating between an investment and a trade prior to purchasing shares is crucial. As a new investor, you must decide whether your risk is going into a trade and determine beforehand when to exit. For starters, using profit targets as well as stop losses can be a great way to know your entry and exit time.

New investors often make mistakes by rushing to buy shares when the prices are significantly high, whereas experienced investors are usually patient enough to wait. Therefore, as a novice trader, you should wait until when there is swing trading to buy your shares when the price drops.

5. When is the Right Time to Sell Stocks?

This is a debatable question, as it ultimately depends on your investment targets and perhaps how greedy you are! Some individuals set a 5-10% cap on the rise or fall in the price of shares. They decide to purchase or sell shares when the price rises above or falls below the set cap. On the hand, others choose to play it long term and wait for shares to go as high as 60% before deciding to sell. Such individuals may make huge profits through this strategy but miss out on the short-term returns.

Whatever strategy you decide to use ultimately relies upon your preferences, how much you are ready to risk, as well as whether do long term investments or day trading.

6. What are the Best Shares to Buy?

Obviously, this is one of the biggest questions that any novice investor keeps asking. However, the truth is that there is no certainty when it comes to the right shares to buy. Instead, there are a number of things an investor can watch out for in shares to determine the best ones to buy, here are a few of them:

  • Companies with A Great Track Record: Stock trading and investing for novice traders is all about looking for stable shares which have a better chance of rising in value and minimal chance of falling. To achieve this, an investor ought to find companies with a good reputation and profit-making record. Businesses that indicate their shares have increased in value with time and are showing so. This suggests that their shares are stable, and if you buy them, you will have high chances of making good returns.
  • Companies in A Commanding Market State: An investor should look out for shares from companies that are performing exceptionally within their industry. Buying shares from companies that are at the top and which can not be knocked down by their competitors is prudent as this will guarantee you a high chance of the increase in the shares’ value over time.

Final Thoughts

Stock Trading and Investing 101 stock tradingNovice stock traders and investors in the market ought to think about the kind of investor they wish to become and what strategies they need to use to make money. It’s advisable to start stock trading and investing using a small amount of money, before using vast amounts of money to buy shares.

If possible, before starting your trading investing journey, ensure you have a savings account specifically for stock trading and investing and avoid investing money that you cannot afford to lose. It is better for you as a new investor to play safe, take your time to understand the market trends before putting your hard-earned money into the risky business of stock trading and investing.

Finally, ensure you utilize free virtual stock trading and investing demos in practising how to trade before putting your real money into stock trading.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances or needs.

Risk Warning: Our products are traded on margin and carry a high level of risk and it is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved.

Categories: News , Trading

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