Stock Investing for Beginners: 10 Easy Steps
If you’re new to the stock market, it can feel a bit confusing. But don’t worry! Our guide on stock investing for beginners will help you understand the basics in just 10 easy steps.
Follow these steps to get started with confidence and build your investment skills.
Step 1: What is a Stock?
As a beginner in stock investing, you need to know what a stock is. A stock is a small piece of ownership in a company. When you buy a stock, you own a tiny share of that company. Publicly traded companies, like Apple and Microsoft, sell their stocks to the public. Understanding stocks is the first step in stock investing for beginners.
Step 2: Choosing a Broker
To buy and sell stocks, you need a broker. If you’re just starting out in stock investing, choosing the right broker is important. A broker is like a bridge between your bank account and the stock market. Popular brokers include Schwab, Fidelity, ETrade, and Robinhood. If you live outside the U.S., consider Interactive Brokers. Make sure to choose a reliable and secure broker to handle your investments. Here is a list of the top brokers used by Tykr customers.
Step 3: Setting Up Your Broker Account
Once you have chosen a broker, the next step in stock investing for beginners is setting up your account. Most beginners should start with an Individual Account. This account lets you use your own money to buy and sell stocks. Follow the instructions on your broker’s website to open an Individual Account.
Step 4: Using a Stock Screener
A stock screener is a tool that helps you find good stocks to buy. As a beginner in stock investing, using a screener can save you time and effort. Tykr, Simply Wall Street, and Seeking Alpha are great tools that help you analyze stocks and find promising investment opportunities. A stock screener helps you make smarter choices in your stock investing journey.
Step 5: Knowing When to Buy
Knowing when to buy stocks is a crucial part of your stock investing journey as a beginner. Tykr helps you figure this out by categorizing stocks as “On Sale,” “Watch,” or “Overpriced.” Focus on “On Sale” stocks, which are usually priced lower and can be good buys. Tykr also provides a 4M score to help you evaluate stocks based on Margin of Safety, Meaning, Moat, and Management.
Step 6: Knowing When to Sell
Selling stocks is just as important as buying them. In stock investing, knowing when to sell can make a big difference. Use Tykr to track when it might be time to sell a stock. Pay attention to changes in stock status and the 4M score. Avoid selling stocks out of fear or panic; instead, focus on long-term trends and wait for a better time to sell.
Step 7: How to Buy a Stock
Once you’ve decided which stock to buy, it’s time to make the purchase. For stock investing, buying a stock is straightforward. Use your broker’s platform to search for the stock, click on the price, and select “buy.” Choose a market order for immediate execution. This step is key to starting your investment journey.
Step 8: How to Sell a Stock
Selling a stock is similar to buying one. Navigate to the stock in your broker’s platform, click on the price, and select “sell.” Make sure to use a market order to sell at the current price. Confirm the details and complete the sale.
Step 9: Ask Why
If someone ever tells you to buy a stock, the last thing you should do is buy that stock. The first thing you should do is Ask Why! As a beginner in stock investing, it’s important to understand a stock before you buy it. Use tools like Tykr to evaluate stocks yourself before making a decision. This helps you avoid making impulsive choices based on unreliable advice.
Step 10: Rule #1 Investing
Warren Buffett’s Rule #1 Investing is essential for stock investing. Rule #1, don’t lose money. Rule #2, don’t forget Rule #1. This means you should avoid selling stocks at a loss. In other words, if your stock goes down below your cost basis (average buy price) you should wait for the market to lift it back up before you sell. This trains a good habit of only selling for a profit just like Warren Buffett.
Conclusion
Starting with stock investing doesn’t have to be overwhelming. By following these 10 easy steps, you can build a solid foundation for successful investing. Learn what stocks are, choose a good broker, use Tykr, and make informed decisions about when to buy and sell. Always ask why before acting on advice and stick to Rule #1 Investing to protect your investments. With patience and careful planning, you can achieve your financial goals.
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