2020 is proving to be the year of the stock market. In an unprecedented shift, retail traders are pouring into stocks, hoping to build lucrative portfolios. From IPOs to blue-chip stocks, interest in equities is surging. Volatility is driving this growth, fueled in large part by tremendous market enthusiasm. Despite bullish sentiment, caution remains the order of the day. Savvy traders and investors understand the inherent risks of stocks.
Two prominent schools of thought have emerged from the current predicament. There are those who believe that diversifying a financial portfolio with a mix of slow-growth, steady-yield stocks and high-growth, high-yield stocks are best. The opposing school of thought has opted for a portfolio comprised of moderate-growth stocks with hedge investments to guard against a downturn. In truth, there are a multitude of investment strategies that can be employed to deliver optimal results.
It’s really important to take a deep breath before you begin trading stocks. With your curiosity piqued, you will want to fill your head with the right information from the get go. Pick a reputable trading platform like StocksToTrade (Read this Review to learn what the platform has to offer) that has been tried and tested to perform under all market conditions. High-frequency, high-volume trading platforms are best since they deliver on expectations with real-time executions of trades (buy/sell orders), real-time market updates, and real-time pricing.
Making Sense of the Stock Markets Takes a Lot of Work
This instructive guide is certainly not a cure-all to the maladies of the stock market; it is a solid foundation upon which to build your financial portfolio. Given the inherent complexities of trading and investing, it helps to begin on a solid footing. The trading platform and the broker serve as your go-to points for successfully navigating your way through tens of thousands of financial instruments. Many folks have avoided the stock market, for fear of dramatic losses. With the right broker, and a powerful trading platform, this needn’t be the case.
Several misconceptions abound in the stock markets, notably:
- You need to be an expert trader or investor to succeed
- You cannot manage your own trades without an expert helping you
- You need big money and a thick skin to profit off the stock markets
- You will lose more money than you will make in the stock market over the long-term
- You should always entrust your investments to financial brokers and financial planners
Fortunately, we now know that anyone with the determination to succeed, the will to learn, and the fortitude to stay the course can profit off the financial markets. Stocks trading is inherently risky. It is this very volatility that drives profitability in the markets. The first order of business is to pick a sector of the market that interests you. There are 11 market sectors. These include utilities, real estate, materials, industrials, IT, healthcare, energy, financials, consumer discretionary, consumer staples, and communication services. Many investors stick with what they know, and gradually branch out into other sectors.
What Are Some of the Pitfalls You May Encounter When Trading Stocks?
Insufficient knowledge. Before you get started, read up as much as you can. Top-tier trading platforms like STT offer a synergistic approach to stocks trading. You can view detailed charts and graphs, with technical analysis in play. Stochastic indicators, moving averages, Bollinger Bands, 52-week high/low pricing, SEC reports, volume trading, valuations, and scores of other elements are readily available. This makes it really exciting to learn how to trade stocks online. The inclusion of a demo-trading account for 14 days at a price of just $7 is an added bonus. Be advised that a trading platform and a broker are different. A trading platform permits you to manage all trading activity using the platform as the go-between. A broker is a sales representative who negotiates trades for you.
A rush of blood to the head. Many novices find that emotions govern their trading activity. As a rule, you should always take emotion out of the equation. There is no benefit to buying and selling on tilt – it’s a recipe for disaster. Rather accept that trades can go either way, but that your determination to conduct the necessary research, use technical and fundamental analysis, and powerful trading tools such as Oracle can sway the needle in your favor. Too many traders and investors allow market momentum to govern their decision-making processes. When markets are selling off furiously, the herd falls all over itself trying to offload stocks. This is the wrong approach. Investors are in it for the long haul. When markets start tanking, that’s when buying opportunities abound.
Knowing when to get in and when to get out. This is an incredibly tough skill to master. There is no panacea to timing the market. It certainly helps to set stop losses and take profit orders, to guard against a market correction, or a sudden bear market. Fear and greed keep people invested for longer than they ought to be. On the upside, investors may believe that they can maximize profits by staying invested in a market that is turning south. On the downside, fear may cause indecisiveness and lead to accelerated losses.
Rather than buying or selling big chunks of your portfolio during volatile trading sessions, mix up the financial instruments in your portfolio. For example, it’s perfectly okay to hold a chunk of Apple stocks and a chunk of gold stocks at the same time. Apple for example, will help to grow your portfolio during a booming market and gold will stabilize the portfolio in the event of a downturn. There are many useful tips, tricks, and strategies that can be employed when trading stocks online. Never invest too much of your portfolio in a handful of stocks – that’s akin to putting all your eggs in one basket!