How to Play the Stocks

Try your hand at the stock market.

Knowing how to play the stock market is a delicate balance between reason, gut instinct and a savvy sense of business. The benefits of investing in the stock market are well recorded. We have all heard stories of both triumph and pain by those who have succumbed to the siren song of the stock market. You can increase your chances of a positive experience with the stock market if you follow some basic steps to ensure your financial safety. Arming yourself with adequate knowledge, finding a competent professional, and keeping track of your investments will aid you immeasurably in your stock market endeavors.

Things You'll Need

• 3 months' worth of household income saved
• Stock broker
• Financial journal

Instructions

1. Set aside a set amount of cash that will not affect your monthly household budget and that does not interfere with your ability to pay your bills. You should have at least three months' worth of cash in your bank account to live on, but preferably a year's worth of cash to really be financially safe. If you do not have this amount before setting aside stock market money you should wait until you do.

2. Try a virtual version of the stock market game before trying your hand at the real thing. A virtual stock market simulation will help you to learn the ins and outs of the market in a safe and risk-free way before beginning to venture into real-life financial risk.

   The most popular stock market game is intended for school-age children but is a great way to learn step-by-step basics of the market. Visit its website at http://www.stockmarketgame.org/. This game will give you a hypothetical $1000 to try your hand at speculation.

3. Pick up a financial news publication such as the "Wall Street Journal" and read the current market news. If you are new to the market, much of the terminology will be foreign to you so it may be best to buy supplementary reading on the stock market at your local bookstore that explains basic terminology. You want to be at least familiar with the jargon of the industry before you begin investing.

4. Learn how to read the stock market. This seems obvious but many people don't even know how to read stock market tickers or analysis. This will be crucial to understanding what you are looking at when you read your investments.

5. Write down at least 10 companies that interest you. These can be companies that you frequently utilize (favorite stores, services, products, etc.), or companies that seem to be growing that you instinctively feel like might produce a good return on your investment. Do financial research on these companies. Look especially at their yearly earnings, their market share prices, financial portfolios, Better Business Bureau ratings and the leadership of the company. Much of this information can be found in financial publications or at the company's website under Investor Relations.

6. Find a reputable stock broker. Since 2007 stock market climates have been increasingly more volatile and risky. Unless you are already a trained professional it will be helpful for you to locate a stock broker to help you navigate the stock world successfully. Check with friends and coworkers and ask who handles their stock investments. Finding a good broker can be a labor of love, but with your early market research done you can go in with some idea of where you want to go with your investments. A broker will have inside market information that you may not be privy to with your own research.

Tips & Warnings

• Watch up-to-the-minute stock information. There are a variety of television and Internet resources that provide minute-to-minute stock updates.

• Know when to sell. This is vital to your financial health; you have to know when to cut your losses and move on.

• Find a good balance between how much you invest and how much you keep in your portfolio. Investing too much could leave you high and dry if the market crashes, but investing too little could provide little return and make you disinterested.

• Don't play around with your money. The stock market can be a risky venture and you don't want to risk too much money that you can't afford to lose.

References

• Ezine: How to Play the Stock Market for Quick Profits
• Articles Base: How to Play the Stock Market

Resources

• "Wall Street Journal" Online: The Stocks