FinuTrade – Trading 101

A Beginner’s Guide

Educating yourself is of the utmost importance before you do any kind of investing. The same is applicable to stock trading. As the stock market is known for its volatility, you have to be cautious in order to minimize your losses and maximize your profits. If you are a beginner and don’t really know from where to begin, this guide can help you cover the basics. Follow the steps that are highlighted as follows:

Step 1: Choose your online broker

If you haven’t already chosen a reputable online stock broker, it is time to do so in order to open an account with FinuTrade. You can take some time to research because you want to feel confident about your choice. Some of the factors that you need to consider, including the trading fee/commission, how intuitive their trading platform is and any trading tools that will be provided. This choice mostly comes down to personal preference and you can opt for a broker you are comfortable with.

Step 2: Research the stocks you want to trade

When you take a look at the stock market, you will discover that there are literally thousands of stocks you can trade. So, which stocks should you buy? A lot of people are stumped here because they don’t know how to decide and move forward. This will depend on several factors, such as how much returns you expect to make, how much risk you are willing to take and how long you will be ready to wait. Moreover, it is also recommended that you go in with the aim of diversification because this will help you in reducing your risks and maximizing returns.

Step 3: Choose the trade that’s right for you

There are different order types that can be placed when you start stock trading. The two basic ones are market orders and limit orders. The former execute immediately for the best possible price in the market, whereas the latter gives you greater control of the price you pay. Limit orders are a good option for those who don’t want their losses to go beyond a certain level.

Step 4: Know what it will cost

Expenses are one of the biggest enemies of successful stock trading. One of these expenses is the trading commission you have to pay to your broker. Similarly, there are other expenses that you may also have to face, such as the cost for withdrawal charges. Other than expenses, you should also think about your risk tolerance. This means thinking about how much risks you are willing to take and how you will react emotionally to losses. You should also be aware of how much you can stand to lose without it having any major impact on your financial stability.

Step 5: Learn about other trading strategies

After you have made your first few trades in the stock market, you can look into learning some other trading strategies that can be helpful. Beginners should only move onto advanced strategies after learning the ropes and this is when you will find that there are plenty of these that exist. Margin trading is an excellent example of such a strategy and you can use it once you are aware of how the market works and have gained some confidence.