How to Be a Stock Investor

The stock market offers financial rewards for those who have mastered it.

Successfully investing in the stock market can provide financial freedom. However, many people rush to stock investing not knowing what they are doing and lose money. Therefore, it is important to know how to be a stock investor. Being right from the beginning will make a difference in your chance of success in the market.

Instructions

1. Learn basic knowledge about the stock market. Before you invest, study about fundamental and technical analysis. You may learn for free at Online Trading Academy, morningstar.com's investing Classroom, The Motley Fool, Investopedia or World Wide Learn's financial education and online investing courses (see Resources below).

2. Pick a broker. Choose between full-service and discount brokers. Novices should choose full-service brokers so as to gain experience and confidence in the market. Experienced investors often pick discount brokers for lower fees. There are many other criteria to consider such as variety of products offered, trading options, customer service, minimum deposit and reputation of the broker. Some major online brokers include E*Trade, Scottrade, Schwab, and TD Ameritrade.

3. Open an account. Most brokers offer an online application which you can complete in a matter of minutes. You will have to provide your proof of identity and proof of address either by entering your Social Security number or by emailing or faxing them the identification documents. Some brokers ask you to complete their paperwork and mail back to them.

4. Fund your account using five common ways most brokers offer: ACH (same-day online deposits), bank wire, checks, transfer an existing account and stock certificate deposit.

5. Set your investing goals and tactics. Design an investing plan. Take into consideration your investing time horizon, financial goals and investing strategies you will use. Some popular investing styles include growth investing, value investing, income investing, momentum investing and CANSLIM investing.

6. Research and buy your first stock. Use the tools your broker offers you to research for good stocks. You can also use online resources such as Yahoo! Finance, AOL Finance, CNN Money and The Wall Street Journal to find detailed and updated information about every stock. Pick stock wisely using your sound judgment and knowledge.

7. Build a diversified portfolio by investing in different segments, sectors and asset classes. Proper diversification will reduce risk and increase return on investment (ROI).

Tips & Warnings

• Practice trading on a demo account before putting real money in. You can test your trading strategies with a demo account. Many brokers offer free demo accounts. You may try Wall Street Survivor-the most popular stock simulation game on the Internet.

References

• Investopedia: 10 Tips For Choosing An Online Broker
• E*trade: Welcome to E*Trade Financial
• Scottrade: Scottrade Account Funding-Ways to Fund your Scottrade Online Trading Account
• The Motley Fool: Valuing Stocks, Picking First Stock Strategies
• Investopedia: The Importance of Diversification

Resources

• Online Trading Academy: Online Trading Academy-Online Trading-Trading Education
• Morning Star: Investment Education, Investing 101, Investment Basics
• The Motley Fool: Investing Basics, Learn to Invest Money
• World Wide Learn: Investing & Financial Education: Online Courses and Training
• The Wall Street Journal: Latest News, Breaking Stories, Top Headlines