How to invest in the stock market: first steps and tips
Are you willing to play on the stock market but have not understood how to take the first steps in investments and buy and sell stocks and shares? Do not worry; below, we will propose an indicative guide for newbies that may be useful if you decide to enter this world.
Investing in the stock market: some premises
With the advent and diffusion of the internet, the methods for buying and selling shares that lend themselves to the use of any interested individual have multiplied exponentially. But a doubt already arises: what is meant by action? Here, the term refers to specific security representing an ownership stake in a publicly-traded company in economic language. In other words, shares are financial instruments in the form of investment capital with which a specific trading company is divided and which can be purchased by an investor.
Having disambiguated this, we can proceed with the discussion we have begun. The internet has also opened several horizons in the economic-financial sector, allowing many financial companies and various entities to build and start the so-called ‘online trading,’ a service for internet investment. The best online casino south africa is a such type of service. Today, this way of playing on the stock market has almost completely supplanted the old methods that obliged the investor to contact and therefore go to a bank or financial institution to access and invest, through brokers, on a specific share. And what does broker mean?
Although it is a lexeme that is part of everyone’s vocabulary, the broker is still hibernating in its old meaning, that is, the one that drew it as a single natural person (or groups of natural persons) capable of acting as an intermediary between buyer and seller. Today, by the hustle above and bustle caused by the web, this term also denotes the processing structure that comes to aid those who want to trade online. Exactly, brokers, in recent years, are also those web platforms, such as Plus500, for example, through which to carry out the purchase and sale of shares and therefore play on the stock exchange.
At this point, aware that continuing in this way, we would incur constant interruptions of the discourse; we prefer to clarify in advance some essential issues whose knowledge, in this case, cannot be ignored.
In addition to the two terms clarified, it is good to indicate the various investment methods the person can use to invest their money: forex, binary options, commodities, or ETFs, for example. Going by order, Forex, often referred to as ‘fx,’ stands for ‘Foreign Exchange Market.’ Translated into Italian, the investor can bet on Forex if he intends to speculate on the exchange of currencies.
Alternative to this market, very widespread globally, is the so-called trading in binary options. This type, often abbreviated to TOL, allows you to speculate on an asset regardless of the respective underlying (derivative) and performance since the trader can bet on positive and negative trends.
The last two options mentioned referring to the following situations. As the name suggests, the first concerns speculation on commodities often referred to as ‘commodities’ or ‘commodities’ (in the plural). In the acronym ETF of Exchange Traded Fund, the second indicates a type of investment fund similar or equal to the respective underlying to which they refer. It is possible to trade in different sectors of the international market.
Before starting for real, we would like to clarify two last relatively common terms that will be part of the following paragraph: CFDs and demos. CFDs are contracts based on the price of a particular underlying. On the other hand, Demos are non-existent virtual money that we mention for a reason exemplified below.
The first steps to playing on the stock market
An individual with little experience in this regard but determined to learn to play on the stock market can find the proper method to start in these demos offered by the real money online casinos. Among the best Italian and European brokers that grant online trading without additional costs and high guarantees, we find Plus500. After registering and opening a free account focused exclusively on buying and selling using virtual money, the user will be able to take the first steps in the sector and test the platform offered by this service. Thanks to this broker, anyone can then play on the stock exchange without any commitment and without any risk of losing money since, as mentioned before, this virtual money exploited for demos does not live in actual existence.
The next step is to replace fake money with real money. It will then be necessary to enter in the form of the selected online broker all your data through which you can open a real account, the amount of which may be, in many cases, limited to just 100 euros. Therefore, the following points will derive from this, which no one will be able to refrain from considering.
After satisfying the previous steps, you will be faced with choosing the title to invest in. Consequently, a daily reading of the updated news and a collection of information relating to the share to evaluate any monitoring operations and prevent any obstacles, which is preceded by the setting of the stop loss (the command that closes the previously open position upon reaching a certain level to limit losses) and take profit (the closing order that works in the opposite way to stop loss).
Okay, but what is the most suitable type to invest in the stock market for the first time? The answer cannot be definitive as this derives from the needs and faculties of each one. However, the most commonly indicated advice concerns online trading with CFDs. Using this solution, the novice investor will have contracts granted by his broker at his disposal, which settle on the performance of the chosen underlying, an index, a currency, a commodity, or whatever.
The convenience of this type lies in the fact that the trader does not buy the security but places a certain amount of money on it, predicting the underlying performance. In other words, the ‘player’ can bet on his downside or vice versa, gaining or losing accordingly quickly and without having an actual title, as happens with the more traditional methods we see below.
I am playing on the stock market: types of investments.
Among the numerous solutions available to those who intend to invest, we want to talk about those already mentioned in this article: Forex, binary options, ETFs, and commodities, better known in Italy as commodities.
Proceeding in order, let’s better clarify how investments on Forex, the largest market in the world to date, work. Although it is easy to deposit and therefore invest in the relationship between currencies, it is certainly known that there are very high returns of the same extent as losses. For this reason, the less experienced are always advised to take advantage of the demos for a general smattering before proceeding with the use of real money. Our advice to beginners is to bet only on the trend of a currency pair, remembering to include the stop loss in the open position to avoid too significant losses.
As for investments in binary options, these are available to anyone, as the previous solution, as long as you pay some attention that is always due in such circumstances. This investment system concerns the launch of direct forecasts on the performance of a particular stock over a certain period. To predict, the course will be positive or negative in times defined by the trader, which can go from a minimum of 60 seconds up to months. If the forecast is correct, you will find pretty rosy gains. In order not to be faced with nasty surprises, the same discourse seen in the previous type of investment applies.
EFTs, those listed funds in real-time that we mentioned, which replicate the index of a particular basket of securities, allow you to invest even with small amounts at lower costs than traditional funds. You can trade on various indices such as emerging markets, entire geographic areas, individual states, publicly traded companies, etc. The advantages of investing using EFTs lie in their convenience and being very liquid and exchangeable in the same way as equities and their respective assets independent of the issuer.
Ultimately: how to play on the stock market by investing in commodities? If you do not wish to bet on Forex, ‘commodities’ are an equally valid financial instrument to seek returns. For a beginner, one of the best solutions to open an investment in these terms that is safe but to the disadvantage of high rates of return is trading on gold. Having decided on which commodity to place one’s deposit, it will be necessary to choose how to invest between futures (type of forwarding purchase or sale contracts), the EFTs above, or shares. Choosing to play on the stock exchange by trading on raw materials can ultimately be a solution for those who wish to invest in something strictly real that does not depend exclusively on trends driven by individual specificities.
In any case, our final advice and use of cold blood and foresight are to seek and contact a reliable, legal, and validated online broker at the Italian and European levels that can guarantee a certain level of security. For starters, it would be good to choose a platform prepared for the virtual money trading system (the demos above) so that you can get some experience before opening a real money account. A broker that unites these points is Plus500, considered unison on the podium of the safest and most reliable services to contact online in Italy and Europe. Otherwise, the choice can fall on 24Option, a broker that can also count on an excellent free online training system for registered members.