Choosing to invest in stocks is an option people take for many different reasons. You may have an interest in the stock markets which you wish to pursue in your leisure time. You may recently have come into some surplus money which you would like to put to good use. Or, you may have decided to turn a part time hobby into a full time job, becoming a day trader whilst working from home. Whatever your reasons, there is a great deal to learn when you first begin to invest in stocks. Here, we take a look at some of the most important points to consider in terms of investment. This article is by no means fully exhaustive, and further research is required before you begin to trade.
So, what is the first thing to do if you plan to invest in stocks? Really, it is advisable to get your head around the workings of the financial markets. At the same time, gaining a grasp of the factors which affect how the market behaves and the prices of shares will give you the tools needed to read the stock market and to plan how you will invest in stocks. Luckily, we have many resources at our disposal which can assist in terms of learning about finance. Financial text books make for a good basic starting point, from which a pupil can move on to financial journals and online websites. Do bear in mind that fully comprehending the stock market is not something which can be achieved overnight.
At this point, your attention will no doubt turn towards the question of precisely which shares you wish to choose when you invest in stocks. It may help to narrow down your search to focus on one particular market sector, for instance banks, energy companies or insurance providers, and you may wish to select a sector that you already have some knowledge of. Reading the finance section of newspapers and keeping abreast of all the most recent developments should help you to pinpoint the most promising companies when you are deciding precisely how to invest in stocks, but do not take an article’s word that a company is doing well and should continue to do so – do your own investigations into the company. You can check out the company’s website and read their annual reports, and you can also ask your broker for information on the company you have in mind.
In terms of choice when you invest in stocks, you will need to choose between using an execution-only broker or an advisory broker. An execution-only broker is regulated by the Financial Conduct Authority to carry out the trades you dictate. However, an advisory broker is regulated not only to carry out the trades, but to provide you with advice on how to invest in stocks. You must decide which one further suits your needs before you begin to trade.