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  • How To Invest In Stocks

    Investing in stocks can seem like a daunting task when you first start out. The idea of researching companies, placing orders, reading the books, and everything else under the sun probably makes you want to pull your hair out. Don't feel bad though because even professional money managers struggle with stocks. The good news is that with a lot of planning and preparation you can educate yourself well enough to make some money on stocks all on your own.

    Let's get started:



    Educate yourself


    Before concerning yourself with making money you absolutely have to educate yourself on all things stock market-related. The internet is full of free and almost free materials. You can do a simple google search and be exposed to endless amounts of information on the stock market. You can hang around this website and soak up information on the stock market and other financial investment instruments you may be interested in. You can go to Amazon.com and buy countless books on the stock market. You can watch youtube videos until the cows come home. There is no shortage of information out there but you have to be willing to put in the work.

    Some good books to start with are:

    Market Wizards

    Stock Market Wizards

    Trade Like A Stock Market Wizard

    How I Made 2 Million Dollars In The Stock Market

    Trend Following

    How To Make Money In Stocks


    I should also add that there will never come a day when you have learned everything there is to know about the stock market because the market is always changing. Instead, you must adapt to the changes. Keep learning just like doctors have to keep learning and improving their set of skills based on new developments in the medical field.






    Pick an approach

    When it comes to financial markets there are three basic approaches to analyzing and evaluating stocks:

    Fundamental - Fundamental analysis is an investing approach that aims to evaluate a company based on its financial records. After this analysis you then come up with a "fair market value" or what you think the stock should be priced at. For example, ABC stock is trading at $54/share and after doing your fundamental analysis you determine the stock should be priced at $120/share so you buy it with a minimum price target of $120. You expect ABC to go to at least $120/share so you invest your money.

    Technical - Technical analysis is a method of stock evaluation where the investor is only concerned with the stock chart itself. This method can is just as involved if not more so than fundamental analysis. Technical analysis or chart reading simply looks for clues on the stock chart that would indicate where the stock is about to go next. This method can be applied to investing as well as short term trading because charts span across all timeframes.

    Quantitative - Quantitative analysis is a combination of the two aforementioned approaches. When you apply quantitative analysis you don't make a move until both methods signal you to. For example, using the ABC stock again. If ABC is trading at $54/share and your fundamental analysis is told you it should be at $120 but your technical analysis is telling you that this stock is about to go lower you would hold off on buying that stock. Both approaches need you to give you the green light before you proceed.




    Open an account

    The simplest step you will take is opening a brokerage account. This is the simplest step and can be accomplished in under 20 minutes. There are several good brokers out there to choose from. Some of the best ones are:

    Ally Invest
    TD Ameritrade
    Etrade
    Interactive Brokers

    The process for opening an account with any institution is the same as with a bank account. You provide all legal and personal info and then you fund the account. You can wire or ACH transfer money from your bank or send a check directly to the brokerage mailing address. Once the account is open and funded you are ready to start buying stocks.

    After you have done all the previous steps and come up with a basic investment strategy you can go ahead and buy your first stock. The process for that is fairly simple. Each broker is different but you will typically get to your order form and enter the ticker symbol for the stock you want to buy. Under order type you will select "Market order" which is basically the fastest and easiest way to get you into a stock. Once you become more advanced you can delve into limit orders and such however those order types are not necessary for what you're doing i.e. long term investing.




    In conclusion


    Investing in the stock market can be very rewarding but it is a serious undertaking and must be treated with the utmost respect at all times. Failing to do so could be catastrophic to your account. Study long and study well. Happy investing!


    *BONUS







    At Wall Street Forum, we offer an amazing service to anyone who wants to invest in the stock market like a professional but doesn't want to have to pay ridiculous fees or spend hours on end researching and analyzing stocks.

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    Last edited by StoneF; 05-30-2020, 01:15 PM.
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