Let’s start with a small story of two friends – John and Smith for understanding stock trading
They both started college together and got placed in the same company. But, here’s a small twist. While John got placed in a superior position, Smith, on the other hand, because of his low grades, got an executive-level job. The difference between the big fat cheques of John and Smith was quite noticeable.
However, after 10 years, while John’s net worth was around $5,000,000. Smith, surprisingly was at around a whopping $8,000,000. When John inquired about this thing with Smith, he got to know that Smith was continuously allocating a fixed portion of his salary in the stock trading. John was stunned!!!
What everybody should learn here is that, no matter what you’re earning, you have to keep investing. The options are uncountable, but the few worth noting are real estate and gold (That’s where John was spending his money on).
But, here’s an underdog too, i.e. stock market. It performs like nobody, but the returns are noticeable only in the long run. While many lose money also, that’s because it requires proper knowledge and skillset, to earn money. People just invest, they don’t analyze.
And, if you want to take a leap and be ahead of everyone else, then this is the moment for you. What…? You don’t know how to start!!! Then why are we here? For you only☺.
Here is the best 9 step guide for beginners to start trading very smoothly. Read this article to the very end, and you’ll get many more things to know too.
Stock Trading Ultimate Plan for Beginners
Finding a Broker:
The foremost thing which needs to be done is to find a stockbroker. These brokers have the required license; they invest your money wherever you want. For this, they’ll charge you a minimum brokerage fee. Remember, choosing a low-cost broker is essential, but not every time this thing works. Thus, choosing a reliable and reputable one is equally important.
Read, Read, and Read:
Stock trading is a vast field, and one cannot just open a brokerage account and start investing in them. Proper knowledge and analytical skills are required. For that, you should be continuously gaining knowledge and experience. The best way is to read books and articles related to this field. Books provide an abundance of knowledge and are comparatively cheaper than many other sources such as seminars and video classes.
Find an Expert:
An expert doesn’t mean a person with a Ph.D. here, but the one who has some basic and a little advanced understanding of stock trading. It could be anyone; your friend, relative, teacher, neighbor, or any other individual. Just make sure that he is not reluctant in answering your questions. He/she must be willing to guide you through everything, suggest the best resources, answer your questions, and keep motivating you, even in bad times. One of the best investors we have today has learned from their mentors. Also, do not choose any expert out there. Be wise!
Carefully Allocate Budget:
No matter how talented you are or how lucky you are, we would suggest you not to invest more than 10% of your income. Reason? Because more than that would be too volatile. Some other worth noting rules are: never invest money which is for short term or must pay expenses. People under 30s can invest the amount after saving some amount for your health emergency and retirement.
Once you are done with your account and have allocated your budget, you are ready to invest. But Wait…!!! If you would not be aware of basic terminologies and methodologies used in the stock trading and market, then everything would be of no use. Bull, Bear, limit order, market order, etc. are just some of them.
Follow the Winners:
Getting inspired by the great leaders and investors, and learning from their ideologies is a great way to win this game. Their perspective and experience in stock market trading would prove to be beneficial for you. One of the finest investors we have is none other than Warren Buffet. You can also look up to Paul Tudor Jones.
Study and Read the market:
As we have told you earlier, you need to prepare well before investing in the stocks. When you are stock trading in a demo account, start following the market and political news, and events happening around your country and globe. You also need to analyze how it is affecting the market. News channels and websites would be a great thing to start.
Practice in a Demo Account:
“It is better to sweat in the practice ground than to shed blood in the war.” – This quote perfectly describes the stock trading scenario and tells the problem with most of the people who didn’t do so and lost their money. You should at least experience stock marketing in a demo stock market trading account for a month. There are a plethora of reasons for it. Firstly, you’ll be able to develop your own investment strategy, which works for you. Secondly, you’ll be able to learn from your mistakes, build your style, and get in-hand experience of how things work. This thing might have cost you your real precious money without a virtual account.
With all your pre-trading things done, you need to make your first stock market trading move now. We would advise you to start small and not invest in one go. Taking risk in the starting would not be appropriate and also, if you lose any money in the beginning, then the demotivation would be at its peak.
It’s a wrap..!!! Wait! There’s a surprise for you. We are done with the steps required to be a successful stock trader. But, do you know your work doesn’t end here.
So, here is an extra two-step bonus for you, which is also equally important. Keep reading, and you’ll know what we are talking about.
Diversify Your Portfolio:
One of the best pieces of advice given by legend, Warren Buffet, is, “Never keep all your eggs in one basket.” And that is exactly what we would also suggest to you. Try to invest in different types of companies, i.e. various industries. This would mitigate the risk associated and is also the best-proven method for long-term investments.
Know the Outcome:
The next best thing you could do is to measure the results and return you’re getting. The key would be to set a benchmark and achieve it. If you’re really serious about the stock market, then keeping the record is a must. And, if you fail to meet the benchmark, then analyze the reasons behind it, and execute corrective actions. The safe bet would be to invest after developing a strategy. You can read some very cool plans here.
So, this was the ultimate step-by-step guide to becoming a millionaire through stock market trading for beginners. But guess what, here’s another surprise for you, waiting below. Just keep going and grab it yourself.
- Invest in industries about which you have some knowledge.
- Avoid small and penny stocks in the beginning.
- Avoid companies whose shares are too volatile.
- Learn the essential tools, techniques, and tactics required to analyze stocks.
Now it looks like you’re delighted with our article as you have got so much complementary knowledge. For now, we also have to take leave, but till then, keep reading, and keep learning…!!! ☺