Basics of Stock Market Investing

5 Steps to Stock Market Investing Success

Basics of stock market investing. 5 steps to stock market investing success. Stock market investing basics for beginners. Stock market basics. Lear the basics of the stock market.

Step 1: Open up an trading account with an online discount broker. Step 2: Fund your account. How much should you put in? No more than $5,000 for now. And not just any $5,000 you can get your hands on. It needs to be money you can afford to lose. Not that you are going to lose it but stock market investing is not without risk and you are just learning. You may make mistakes.

Mistakes made in the stock market are costly.

Step 3: Choose companies to add to your watch list. How?

The most basic stock market rule in picking stocks to trade is: never trade a company that isn't financially sound.

Why not?

Because if they go belly up before you exit the trade, you could lose every cent you invest. I speak from experience. One of the most important basics of the stock market you can learn that will help you become a successful stock market trader, is how to calculate cash flow.

Stock market investing basics dictate that beside being financially sound, the companies on your watch list need to be diversified. Choose companies from many different market sectors. It is all too common for new investors to make up a watch list of companies in their pet sector.

I like retail stocks.

I'm a woman. I'm comfortable in that sector. I understand it. It's only natural that my favorite stocks are retail stocks. But I am careful to round out my watch list (and by extension my portfolio) with mining and financial and energy stocks.

Step 4: Develop a winning trading strategy.

What is a successful trading strategy?Any strategy that wins at least 50% of the time AND which generates gains that are at least 3 times the size of its losses is a successful strategy.

Think about it.

If at least 1 out of every 2 trades you take results in a gain and your gains are always 3 times as big as your losses, you WILL make money.

That said, I prefer stock market trading systems that win more than 50% of the time. 65-75% is much more desirable in my opinion.

But a strategy that wins 75% of the time is a wildly successful strategy. These are much harder to develop than good, profitable stock market strategies that win 50-60% of the time.

The later is all you really need to make money in the stock market.

Step 5: Start taking trades!

Paper trade until you're comfortable with your strategy but understand that paper trading is completely unlike real time trading with real money. Your responses to both wins and losses will be different once you start executing live trades.

I am an online trader, not an investment advisor. I am not qualified to tell anyone what stocks to buy or sell. The information on this site is offered only to help new investors learn the basics of stock market investing. Risk is an inherent part of stock market investing. Neither homemade-money-guide.com nor I can be held responsible for any losses you may incur.

Stock Market for Beginners
Stock market basics covered rules 1-4. Stock Market For Beginners continues with rules 5-8. This is not a complete education but offers the basics of stock market investing to help you lean how to trade stock.

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U.S.A. stock market history online. Facts, stock market exchanges. History of the stock market in America. Brief history of stock market trading. Stock market crash history.

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