Without the slightest doubt, stock trading is one of the most important investments that people make. It is considered an investment process that has existed for a long time, where people buy individual shares of promising or successful companies. They expect an absolute increase in its price, which means their gain, the stock market is one of the most extensive markets Finance in the world, and indeed, as a beginner in the world of investment, you need to know everything about that market before starting to trade stocks, which we will show in this article.
What are stocks trading
Quite merely, shares are part of the ownership of a company. The share is considered entitlement to the company’s property and earnings, and to have a role in it, so the more shares you have in a company, your ownership in the company and your percentage in the gains or losses becomes more.
What you want to do while trading stocks is to follow the stock market well, identify the promising stocks or companies that you want to invest in. Accordingly, you buy the shares at a specific price and wait for the share price to increase according to your expectations, which means your gain, whether selling the stock At the higher price or even keeping it at its high value.
The difference between regular stock trading and online stock trading?
Some significant differences exist between regular stock trading in traditional stock exchange positions and online stock trading.
The first difference that exists between traditional trading and electronic trading is that in the case of conventional trading, to make an order to buy or sell in the stock market, the investor must contact a broker to do that task, which makes it take longer than doing so by only accessing Online trading platform and buy the stocks you want to invest in.
The second difference between the two is the ease of access to information. While trading stocks on the electronic market from anywhere in the world, you can easily access all the information you need, as analysts send their data from anywhere in the world in moments. Still, during traditional trading, You must obtain information from newspapers, news or television programs to know the new information and changes, which means a long delay in purchasing the shares you want immediately.
The final difference between online trading and traditional trading is the relationship between the client and the customer. Where on the Internet you deal with a lot of clients per day, which makes conversations with the broker few and brief and the topic is not personal, while in traditional trading they always work to build long-term relationships with their clients because of the long time in which they perform operations compared to electronic trading, which is what he prefers Some investors.
How to start trading stocks?
To start trading, you have to follow the following steps
1- Choose your investment type
There are many types and methods of investing in the stock market, and we will mention them later in this article; you must first choose the style of your investment because based on it, you will open your account.
2- Opening an account
The second step you need to take to trade-in stocks is to open an investment account, which means an account with a specific trading broker so that you can start investing and trading in stocks in various stock markets.
3- Knowing the difference between stocks and investment funds
It is the type of stocks that you will invest in, there are two types of investment in stock trading, and they are investing in individual stocks or mutual funds, and you must know the difference between them to choose the type of investment that you will make.
Individual stocks, if you intend to invest in individual stocks, you can buy shares for a specific company and prepare a portfolio of shares from many companies. Among the advantages of this type of investment is that a wise choice can pay off generously. Still, the chances are that any individual shares. It will make you rich extremely slim.
Trading in mutual funds makes you invest in small portions of many different stocks in a single transaction. When you invest in an investment fund, you also own a small amount of those companies, and you can subscribe to many funds to have various stocks. Among the advantages of this type is the great diversity among the different stocks, but it is difficult for them to increase their price like individual funds suddenly.
4- Create a budget
While investing and getting to that step, you should ask yourself two questions:
How much money do I need to start investing in stocks?
The answer to this question often depends on the price of the shares you want to invest in their own companies; those prices can range from a few dollars to thousands of dollars. If you’re going to invest in mutual funds and you have a small budget, then the ETF may be your best bet. Often the minimum mutual funds are $ 1,000 or more, but ETFs trade like stocks, which means that you can buy them at a share price, and their cost may be as low as $ 100.
How much money should I invest in the stock exchange?
If you are investing, you can always invest a large portion of your money in investment funds, especially in the long term.
5. Start to invest
Investing in stocks has many investment methods and strategies, some knowledge of these strategies, and investment types. We suggest that you always use simple and traditional methods and start investing and entering the world of stock markets.
How to choose a good broker for trading stocks
While choosing the broker to invest in, you must do a good study before selecting a broker. You must first know all your plans during investing to determine what is suitable for you and the broker who will achieve what you want and verify the following:
– You have to choose the broker that takes the lowest cost on the services you want to perform.
– Compare all the costs of buying and selling, keeping stocks, and all other security things done through the broker, not just the commission comparison.
– You can find all the comparisons you need between brokers, whether in financial magazines and news or through the Internet, and choose your suitable broker.
Types of trades in the stock market
There are many types and ways to invest in the stock market, and the basic types often depend on the time in which the transaction is opened and closed, which we will present in the following points:
1- Day trading
It is the type of trading that relies on opening, and closing transactions in the same market called active trading. Still, this type of trading cannot be recommended for beginners because it requires quick decisions and great experience in the stock market, including market-making, balancing, and modular trading.
2- Short term trading
It is trading carried out by transactions by taking a period of a few days to weeks sometimes, as the sale process does not exceed a few days.
Swing trading and pattern trading are two examples of short term investing.
4- Long-term trading
It is the process of buying the stock and that you buy the share and keep it for a period ranging from many months to long years. It depends on the financial analysis of the share. Investors do this based on promising companies’ expectations expected to increase their prices significantly over the years.
Advantages of trading the stock market online
Work from home
Trading through the Internet has become a good opportunity for all people to work from home and make money from it to trade in the stock market in the Gulf countries and the whole world from home. All you need is a computer and an internet connection.
Among the advantages of trading in the stock market via the Internet is trading in shares and paying low commissions to the broker, due to the massive spread of online trading and the intense competition between them, which led to the low prices, which is in the interest of the investor.
You can freely choose the stocks you want to invest in. You are the manager of yourself, and you decide which companies or investment funds you wish to invest in.
Work at any time
Because of working from the Internet, you are not restricted to any work time. All online trading markets are open 24 hours, and you can trade in them anytime you want.
No money limits
Among the advantages of online trading in the stock market is that there is no need to invest within certain limits, whether as a minimum or a maximum of the funds you want to invest in. It is all up to your freedom.
Your trading in stocks via the internet market allows you to invest in different investment products and great diversity so that you are not forced to invest separately in one thing. You can still buy separate shares from other companies to depend on the variety and complete freedom for you.
Disadvantages and challenges of trading the stock market online
The most critical challenges facing investors and traders in the stock market are the risks and adventures that they always need to take because one wrong move can lead to losing a lot of money, so always make sure to know the risks you face and do not invest more than you can afford to lose.
When you trade in stocks, you cannot always predict whether that stock will become a profit or a loser in time. It always makes some mistakes even for the most experienced traders, so that sudden fluctuations in the market situation can cause significant losses.
Investing in stocks is very time consuming, as you need a lot of research, time, and reliable stock analysis. It is a complicated process at times, and you need a lot of time to follow up on the stock that you have purchased and the extent of its price changes over time.
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