Best Ways to Buy and Sell Stocks

Guide to Stock Trade while Minimizing Risks for Beginner Investors

Feb 5, 2010 Fleur Hupston

Learn the basics of stock market trading, how to minimize risks and pitfalls to avoid.

The well known saying goes "Don't work for money, make your money work for you." Investing a lump sum or a small sum of money each month is a good way of doing just that, provided some basic rules are followed.

Stock Market Investing for Beginners

The stock market is not a casino. Investors who do not know what they are doing, who are trying to make a quick buck or who are greedy will more than likely lose their money. Here are some basic guidelines for beginners.

Get educated on stock market investing: Don't know the difference between a bull or bear market? Start reading up now. There is plenty of information out there to guide new investors by means of books, courses, stock market stimulation games and expert advice.

Don't Guess: Heard about a red hot penny stock that's about to skyrocket? Do careful research on any company before investing. Successful investors like Warren Buffet choose stock based on the company's overall potential and he is not so much interested in capital gain as ownership in companies capable of generating earnings. His strategy is to buy shares in a company that he would feel comfortable buying outright. Do not make the mistake of rushing in and buying stock without a proper investigation.

Buying bottomed out stocks does not necessarily make a good pick: Some companies that have lost value recently may take years to recover, or the stock price may fall even lower.

Be patient: Holding stock and investing successfully is often a long-term game. Develop a stock-picking strategy and stick to financial goals. Read up and find out what strategies have worked for successful investors in the past.

Look for a discount stock broker: Once an investor feels comfortable with his/her ability to buy and sell stock, look for a broker who will only execute trading instructions and will not offer investment advice. They usually offer an online stock trading account and will charge a minimal amount per trade.

Buying and Selling Stock – Pitfalls to Avoid

If a potential investor has large debts and financial commitments, it is better to clear debts, store cards and personal loans before considering investing capital in the stock market. Don't invest in the stock market with money needed for immediate daily requirements.

Decide on personal risk profile. For example, some investors are conservative and are not prepared to take a big risk with their money, in that case, investing in a money market fund might be the answer. Other investors are prepared to be more aggressive and take greater risks with the potential for greater gains.

Buying stock in a company can be rewarding financially. Many people lose money in the stock exchange because they lack the necessary knowledge or do not learn from mistakes made. In learning to invest, be willing to learn, let go of pre-formulated ideas and develop the discipline and patience necessary to succeed.

Ever wondered how to avoid investment scams? The article How to Find a Reputable Stock Broker examines this question.

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The copyright of the article Best Ways to Buy and Sell Stocks in Investment is owned by Fleur Hupston. Permission to republish Best Ways to Buy and Sell Stocks in print or online must be granted by the author in writing.

Trading Stocks and Shares - Minimize Risks