So, you are interested in investing in the stock market, but where do you start?
If you are going to invest profitably this is no easy task. You will need to develop your knowledge and turn that knowledge into experience. You will need to complement your knowledge of how the stock market works with an understanding of what tools and software you need to obtain the information you need to make good decisions on where to invest your money, how much to invest and for how long.
This list of 10 Stock Market Investing Tips will give you a structured path to begin your journey.
Tip 1 – Get the Knowledge you Need – Training
There are essentially 2 ways to gain the knowledge you need to understand investing in the stock market, you can teach yourself or you can attend a training course.
1 – Formal Certification in Market Technical Analysis
I am certified in Technical Analysis and a member of the industry body the Society of Technical Analysts (STA). This Society is a founder member of the International Federation of Technical Analysts (IFTA). Both of these “not for profit” institutions offer the highest quality education in Market Technical Analysis, with deep syllabuses and skilled lecturers. By the time you certify via your examinations you will have an internationally recognized certification and hugely improved knowledge and confidence. It is not cheap but the quality is excellent.
2 – Self Driven Learning
Self-driven learning usually takes the form of trawling the internet for knowledge, reading books and taking online training courses. The advantage of this is you can move as fast or slowly as you want and you can take the time you need to immerse yourself in the subject matter. The Liberated Stock Trader. business is built on offering great free stock market training and an industry leading PRO Stock Market Training with in-depth videos (instructor-led training) and a hard copy book to support the lessons. We also provide 121 investing coaching to allow you to get personal training after taking the Pro course. There are of course other online training providers, I encourage you to compare price and quality of the offerings before making a purchase.
3 – Classroom Training Courses.
Each country has its own Classroom Stock Market Investing Training providers, some better than others. If you want training in person then I suggest you read past independent reviews of the training vendors (not from their own website) and make an informed decision. Try to ensure your instructor has a formal qualification in technical analysis from IFTA /MSTA (International Federation of Technical Analysts/ Member of Society of Technical Analysts) or the relevant industry experience & track record.
Knowledge is power and you need more power. There have been some fantastic books written about investing. They are all available here in the Liberated Stock Trader Top 20 Stock Market Books of all time. If you are on the go, commuting try any of the top 20 Financial Audio Books.
I have personally read them all and many more.
Tip 3 – Do Not Get Tempted with Penny Stocks
As you start to learn about the stock market you will be bombarded with adverts for Penny Stocks Newsletter promising amazing returns. Do not get sidetracked from your acquisition of knowledge by the promise of quick wealth. It never happens. Penny Stocks Newsletters are a scam. Don’t believe me? Watch my video exposing penny stocks scams and the inherent conflict of interest that these Penny Stock promoters have. Always read the site disclaimers.
Bonus Tip Video 1 – Why to avoid Hot Stocks Newsletters
Watch this humorous yet factual video I made delving into the dirty secrets of Penny Stocks and Hot Stocks Marketers.
Tip 4 – Do Not Blindly Follow “Stock Market Gurus”
Again as you get more involved in investing you will see there is an army of Gurus ready to recommend the next hot stocks, for a monthly subscription cost of course. While there are clearly a handful of people that constantly make profits in the market, it is less than 10% of all investors that make profits. If you must follow any recommendations newsletters be sure to read independent reviews or ensure they are fully vetted by a third party.
Tip 5 – Choose the Right Knowledge Resources
The internet is overwhelmed by information on stocks, companies, and news. You need to choose top quality resources and ensure they are part of your regular routine. Here we have compiled a list of the Top 20 Stock Market Websites for you evaluate what best suits you.
Now this is an important one. While free stock market charting packages and stock screening tools are available on the web, they are no match for premium software packages. The quality of vendor products available for a monthly subscription has exploded in the last 5 years. Free options can be useful as a beginner especially during your initial training period, but as you get more serious you will need to invest in premium services. Luckily the costs of these services ranges from as little as $20 per month to $100 which is a significant reduction compared to 10 years ago. Liberated Stock Trader goes through a yearly in depth testing of the best software vendors to rate them side by side to establish the best of the best. Take the time to read the Top 10 Best Stock Market Analysis Software Review.
Tip 7 – Choose the Right Low-Cost Broker
There are literally thousands of companies offering brokerage services across the globe. So, how do you know which only if right for you.
1 – Full-Service Brokers
A full-service broker will typically be a human that will call you up regularly to recommend stocks for you to buy. There will be a significant cost for this advice and for the execution of the trade. Unless you have a large amount to invest this will not be a good option. You should also not go for this option unless the broker commits to a certain service level (return on investment). You would be surprised at how many full-service brokers fail to beat the market every year or even have a qualification in Stock Analysis At the end of the day they will earn their commission on the size of the trade, not the profit they make for you. Always try to understand the motivation and incentive structure for the person advising you.
2 – Banking Brokers
Well, we all have back accounts right. So when you login to your bank they are always pushing brokerage services. This essentially means you can invest money from your account into stocks. The problem I find with them is that although is it relatively simple to conduct a transaction they are usually very expensive. I have seen across Europe and the U.S.A. that a single trade can cost up to $100 or EUR 100. This is unacceptably expensive considering that are offering little more service than trade execution.
3 – Discount Brokers
By far the best option is to use a great discount broker. Discount broker’s, at least the major ones, usually have good tools and low-cost transactions. $5 per transaction, regardless of size is typically the right price. You do not after all want your trading profit margin being reduced by brokerage fees. It is your money let’s keep it that way.
If you are in the USA there are two great options. TDAmeritrade and TradeStation. TradeStation also has one of the top Stock Market Analysis Software Products and you will get it for free if you open a brokerage account with them. See our Top 10 Review for further details.
Bonus Tip Video 4 – The Beginner Investors Checklist Part 1
This video goes into more depth on:
- Online versus offline trading
- Broker Selection Pro’s and Cons
- Free Charting Packages versus Paid Solutions
Tip 8 – Understand both Fundamentals & Technical Analysis
In some ways stock investors are mostly on a single track. They either invest based on the fundamentals (focusing on undervalued stocks and financials) or technical analysis (focusing on the stock charts). You need to be able to understand both of these concepts in depth and incorporate a strategy that includes both paradigms. Read here our review of Stock Market Training Courses and a Video Chapter from the Pro Training describing the difference between both.
Tip 9 – Start to trade in small amounts first.
Let me guess, you have entered retirement with a pot of money and are looking for a new hobby, or you have inherited some money and want to make more money. In both cases you should not go head first into your initial investments and invest a large proportion of your money. Start small, ($1,000) and when you have proven to yourself you can make money consistently then increase your investment pot. If you start investing big straight away without building your experience the chances are the market will eat you alive.
Tip 10 – Believe in Yourself
Ultimately the sweetest part of this game, is the fact that you made the decisions on what to invest in, how much to invest and when to close the investment and you came up with a profit. Do this consistently and you will be in the top 10% of investors. Beat the market return, which is approximately 6-8% per year and you can consider yourself successful. To do this you need to know yourself and believe in your style. If your style does not work adapt it and improve continuously. When you have a winning system that makes returns that you can truly believe.
Bonus Tip Video 2 – 5 Stock Market Mistakes to Avoid
As well as knowing the right things to do as a beginner in the Stock Market, it is important to know what things to avoid. This 5 minute video, explains in a little more depth the following topics.
- The Guru Belief
- The Hit and Hope
- It is easy to buy stocks
- Trading using free online stock charts
- Automated Stock Buying Robots
- Choosing the right method for training & knowledge acquisition – meeting your requirements and aspirations
- Read the best books – or even audio books – but thoroughly learning requires study
- Do not invest in Penny Stocks or enroll on those hot stock newsletters promising untold riches
- Be your own stock market guru – learn until you believe in yourself
- Choose the right online resources to use – setup your regular routine, news, economic data charts
- Choose the best software to meet your needs and budget – there are many high quality packages out there to meet your needs
- Choose a good quality low cost broker – good trade execution – good analysis programs
- Understand Fundamentals and Technical Analysis – the best of both worlds
- Start small – don’t blow your budget while learning
- Believe in yourself and your decision making
To your future.