5 Things Every Stock Trader Needs to Know in 2020
If you’re looking to invest your money into the stock market in today’s digital age, there are a few things you’ll need to know in order to help your money grow in the stock market. If you master these five things, you’ll be well on your way to trading in the stock market and putting your money to work for you.
Understand What a Stock Is
These are the basics. A stock is a company that is publicly traded and sells shares of itself to give buyers a chance to own a piece of that company. These shares go up and down in value depending on how the company is doing at that specific time and how many people are buying shares of it. The more people buying shares, the higher it will go. The fewer people investing in shares, the lower it will go. Stock trading revolves around buying and selling shares of different stocks to make money. Some stocks are groups of companies or either shows a trend of the entire stock market. Other stocks are considered Blue Chip Stocks and are significantly more reliable when it comes o investing because of their success in the past.
Learn the Terms
The next thing every stock trader needs to know in 2020 is all of the terms that go along with day trading. You can have a ton of money and know what stocks you want to invest in, but if you don’t know terms like low PE stocks or high PE stocks, it won’t get you very far. There is a lot of lingo that comes with becoming a stock trader and the best traders can master all of the terminologies so they can divide better strategies for investing and making money. If you don’t know the basic terms, be sure to learn them first before venturing on to the more advanced language of the stock world. Additionally, some terms like Annual Report or Arbitrage will help you understand the nature of the market and not just how to trade stocks. All of these terms are important because they all revolve around trading on the stock market.
Find a Good Place to Trade
Finding a platform that you enjoy trading stocks on is a crucial step that every single stock trader in 2020 must do. In this digital age, there are a ton of different ways to trade stocks. Some people trade at investment banks in the hopes that their trades are more secure and handled professionally. Others trade with brokers who are nationally recognized. One of the most common trading trends in the last few years has been trading online using apps. These online brokers have opened a new world of trading for young investors and have even removed commission fees. Most have also enabled traders to buy stocks in fractions so an entire dollar amount doesn’t have to be spent. These new innovations make trading on digital platforms one of the best ways to go for stock trading in 2020.
Devise a Strategy
After finding where you want to trade stocks, the next thing you need to do is learn how you want to trade them. Having a good stock trading strategy could be the difference between making a lot of money or losing a lot of money in the stock market. It’s not wise to become a stock trader with no trading strategy. Even the more simple strategies are more effective than not having a strategy at all. One of the more popular strategies is dividend investing. Dividend investing is when a stock trader buys a variety of dividend-paying stocks and then gets paid dividends for owning each stock. There are more strategies like this and it’s best to do research to find which fits you the best.
Find a Mentor
According to stocktrader.com, finding a mentor to guide you through the world of stock trading can be a vital asset in learning how to make money on the stock market by trading. Learning from someone who has been successful in stock trading will help you gain experience quicker than you would on your own. It will also reduce the amount of money that could be lost in the stock market in the first few months of trading.