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Stock Exchange: What a Novice Investor Needs to Know

In the exchange, You can earn millions but also lose them. To get started in the financial world you will need to know how much money you need to start investing, how to choose a broker, and if there is a guaranteed way to get rich trading on the stock market.

Why invest and why is it beneficial for me?

Let’s say you have a deposit in the bank, but you are not satisfied with the interest rates and you want to earn more, you must understand that the greater the opportunity to win, the greater the probability of losing all the money. If you understand the risks, you can start investing.

The easiest way for a beginner is to buy stocks and, after a certain time, sell them at a higher price, thus making money. The main thing to remember is that the winnings are not luck, as in a casino, but will be the fruit of thoughtful actions. It is not a game, but a job.

I want to try it. Where to start?

Modern exchange is electronic, you can trade on the Internet without getting up from the couch. But this requires an intermediary, a broker, that is, a company that has a license to trade shares. Before heading to a broker, there are a few important things to consider.

1. Calculate how much you are willing to invest

In theory, you can start with any amount, the higher the investment, the higher the profit.

2. Consider how much time you are willing to spend, and depending on this, decide whether you are ready to trade on your own or trust a professional.

3. Choose your strategy and assets

What is the strategy?

A strategy is a set of investment parameters that determine your style of behavior in the stock market: what assets you trade, how often you sell, what guides you when making decisions.

The simplest version of the strategy: you choose what to do:

  • Goods
  • The period for which you want to invest
  • The maximum amount of losses

Let’s say that the assets are stocks of pharmaceutical and chemical companies, the period is 1 year, the amount of losses is 20%. In this case, you immediately sell assets if they have dropped in price by 20%, even if the year has not yet passed.

If you have chosen trust management, you must also decide on a strategy. Only in this case will you choose from the offers that are already on the market.

4. Find an intermediary company

Once you have decided on a strategy, it will be easier to find a broker (broker). The most important and paramount thing when choosing a broker is that you can only entrust money to those companies that have a license. See the list of licensed companies.
If you choose to invest on your own, there is the following way to go:

  1. Agree with a broker;
  2. Open and replenish a brokerage account;
  3. Install a special program for trade;
  4. Start buying and selling.

If you have chosen the path of trust management, it will be sufficient to conclude an agreement and transfer the money to the management company.

Common mistakes: how not to do it

You can’t invest everything you have insecurities: First set aside money for living expenses and unexpected expenses. Create a “buffer”: open a bank deposit and only then proceed to share trading. Invest an amount that you are willing to accept the loss.

Don’t act haphazardly, do the training: If you decide to trade the exchange yourself, be sure to complete the training. Most brokers offer courses for beginning investors. Trading programs usually have a demo mode – you can try it out without the risk of losing money.
Don’t give in to emotions: Acting on impulse can lead to many mistakes. A novice investor should not react harshly to the slightest price movement in the market. But you must act decisively if the price changes significantly. Set the limit of the losses you are willing to incur.

Do not put all your money in a single investment: It is better to buy stocks of companies from different industries. For example, when oil prices fall, the values ​​of all companies in the oil and gas sector suffer. If you buy securities of companies from various sectors of the economy, for example, the chemical industry, mechanical engineering, telecommunications, this will help you reduce the risk of losing your invested money (or, as the financiers say, to diversify your risks ).

Don’t trust promises to earn 500% a day: Only charlatans can guarantee something in the stock market. A responsible broker must warn you of the risks. The situation in the stock market is changing and only you are responsible for the decisions that are made.

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