Stocks are an asset class of investments where you buy a share of ownership in a publicly traded company. Stocks are equity in a company. Shares trade on stock exchanges through market makers and executed for investors through a stock broker.
How do you invest in stocks?
- Decide you want to own stocks.
- Understand the risks and rewards possible in the stock market.
- Research the price action history of the stock indexes and individual stocks.
- Choose a time frame for stock ownership.
- Decide what type of investor or trader you want to be. Value or growth investor, day trader, swing trader, trend follower etc.
- Sign up for a charting service.
- Open an account with a stock broker (or a 401K account at your job).
- Transfer money into the account.
- Choose if you want a margin account with your broker.
- Be aware that there can be commission costs for each buy and sell you make along with account fees.
- Decide if you want to invest or trade in individual stocks, exchange traded funds, mutual funds or a combination of these.
- Add money into your account on a regular basis.
- Focus on growing your capital and allowing the returns to compound.
- Be sure to file taxes on your account each year whether you make or lose money.
This is an overall basic outline of what you need to know to start buying and selling stocks, this is a good starting place for new investors and traders and then drill down and research the answers for yourself.
