How to Play the Stock Market
How To Play The Stock Market
So you have a few extra dollars in your pocket and you want to learn how to play the stock market? Well the first thing to remember is that playing the stock market isn’t a game of chance, despite the exciting adrenaline rush that can come from making a fast gain on a hot stock tip. If you’re looking to make money online, the stock market is a great but risky proposition.
First things first, you need to establish an investment account at your local bank, investment company or online. If you are unfamiliar with how to make a trade, you might be wise to speak to an investment representative first, to answer some of your questions. Be warned though, investment reps work on commission, so be prepared for a high pressure sales pitch.
So now that you have your account you need to move on to step two in our how to play the stock market tutorial, learn to do research. You’ll want to learn to understand the ins and outs of what makes a stock rise, fall and why it is valued the way it is. Typically stocks are valued as a multiple of earnings, for example a stock may trade at three times its annual earnings, and the reason for that is whomever buys the stock is buying a piece of its future and past earnings are irrelevant to that investor.
Lastly, and this is the most important piece of advice I can give you, do not trade on emotion! People fall in love with stocks, maybe they made you a big chunk of money in the past and you just cant bear to sell it, or maybe you’re so excited about a stock that you’ll pay any price. If you’re an overly emotional investor you are better off investing in something secure like CDs, though some of the best CD rates don’t pay a lot these days so there is a risk and reward trade off. Whatever the case, don’t trade on emotion, trade on research. Remember you’re in this for the money, if you want to learn how to play the stock market, you need to be smart with your investments.