When you decide to start investing in the stock market, you might quickly come to realize that it is a complicated venture. It can take years of experience to become proficient at generating an income from the stock market. That is why it is best to start off with the most basic information on investing in the stock market for dummies and start to gain experience.
You will need a stock trading service to execute your trades for you. Many brokerage houses that will set you up with a stock broker you can talk to and discuss your ideas. As a new stock investor, you will want your advice to come from a source that is more objective than a broker that makes a living from commissions on selling stock. The Internet offers several online brokerage sites that can offer you a full library of useful information and the ability to contact staff members if you have a question.
When you are investing in stocks for the first time, always do a test run before you start using real money. Many online stock broker sites will have stock investing games you can play in which you buy real stocks with imaginary money. You can follow the process from research to purchase without losing a penny of your own funds. Be patient and get involved in investing games for a month or two before you start to invest your real money.
What to Buy
When it comes to buying your first stocks, it is best to stick with what you know. As you develop your stock trading skills, you will be able to identify potential money-making investments. But in the beginning, you should consider companies you are familiar with and know something about. Look at companies whose products you are already using. Even if they are international brand leaders, they should still be considered a good stock purchase.
Buying a stock means that you are purchasing partial ownership of a company. Treat a stock purchase like you would any other large purchase such as a home or a car and do extensive research before you make a purchase. Go to the company's website and look over the last few annual reports to see how the company is progressing financially. Look for special projects that were mentioned in the annual reports to see whether the projects were completed or abandoned. Look through industry trade magazines and newspapers to see whether the company is an industry leader that is ready to release a new product. Know as much about the company as you possibly can to determine whether it is a good investment.
George N. Root III began writing professionally in 1985. His publishing credits include a weekly column in the "Lockport Union Sun and Journal" along with the "Spectrum," the "Niagara Falls Gazette," "Tonawanda News," "Watertown Daily News" and the "Buffalo News." Root has a Bachelor of Arts in English from the State University of New York, Buffalo.