Posted by forex at 6:38 AM
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1. Know the language of stocks, the stock market and trading. Do you understand terms, such as the stock exchange, ticker and the Dow Jones Industrial Average? Unless you are well-versed with industry language, you will not be a very effective stock trader.
2. Find a brokerage. Using a brokerage is absolutely necessary because it is the entity that actually buys and sells your stocks, at your behest. There are two major kinds of brokers: direct-service brokers (which charge high commissions and are best suited for the experienced trader) and discount brokers (best for the novice trader). Fortunately, there is no need to visit a brokerage since you can join one online, such as at E*trade or Fidelity.
3. Consider the stocks you want to trade. You can choose any companies listed on the NASDAQ, NYSE, OTCBB, AMEX stock exchanges. As a beginner, you should diversify your stocks until you get a feel for which companies are poised to perform well and give you more returns.
4. Invest a minimum lump sum to enable your trading account with your broker (which will hold your trading earnings). Most online brokerages are discount brokerages, and specify fairly small minimum lump-sum amounts (such as $50). You could invest more than that if you wish, but it is better if you don't exceed $1,000 until you have gained more experience.
5. Monitor the stock exchanges on the Internet and on TV to gauge where your money stands. Remember, if you have a discount brokerage you are limited to about 10 trades per month, so choose wisely when you want to buy or sell a trade.