If you are keen on making your money work for you, you must set aside a portion of your income for stock trading. But how to trade stocks? Read below to know.
It starts with you signing up for an account with a broker like eTrade, which will enable you to buy and sell stocks on exchanges like the New York Stock Exchange, Nasdaq, among others. Once you have verified your account, you can then start buying and selling stocks. Before signing up an account, make sure that the broker charged flat fees per trade, not a percentage commission. You will save money that way.
Most people go into stock trading with a plan to become rich with no solid plan on how to get there. Like any other trading activity, you earn money when you buy low and sell high, that is, you earn money when you buy at the lowest possible price and buy when the price of the stock goes up. Unfortunately for most people, the decision to buy and sell rides on their emotion, and greed.
Even with Fortune 500 companies, their stocks can fluctuate many times during the week or even during the day. What you want to do, if you want to trade blue chip stocks like Facebook, is to monitor the price of each stock in a graph. The buyers and sellers are always playing a tug-of-war and you can predict when the price of a stock will go up and when it will go down.
How much money can you make trading blue chips? That really depends on how many you buy and how high the price increased. Historically, though, people buy blue chips for security and, sometimes, for their dividends or the profit shared to stockholders.
If you truly want to make a fortune in stocks, buy stocks from companies that are on the verge of making a breakout in their profits. For this, you will need to do research on the company that is offering the stock. If there’s a company stock that interests you, check the company’s financial report at the Securities and Exchange Commission website. A company that has reported solid earnings within the past year is usually a good stock to buy.
When you buy, make a plan to sell when the price is goes up 20% to 30%. Some people like to wait until the price doubles, but this usually takes too long and sometimes it doesn’t come at all when the company goes bankrupt. So, minimize your risk and earn as much money when you can. This is true especially for penny stocks or stocks that trade for less than $5 per unit.
Penny stocks are notorious for having peddlers that inflate the price by hard-selling stocks of companies that don’t have a solid financial base. They are especially aggressive to newbies who like to ask how to trade stocks and money. Not surprisingly, they give stock trading a bad name.