Learning how to trade in stocks can be a little bit daunting especially for a beginner. Their excitement and eagerness to make money can sometimes get the best of them. It is their eagerness that forces them to make costly mistakes and not get the best result. By following simple rules, you can maximize your earning potentials when trading on the stock market.
Find the right broker at the right price.
One of the biggest decisions every trader makes is the choice of broker. The decision you will make can affect the fees you will pay, the kind of investment you can have access to, and the potential returns. Unfortunately, many brokers take advantage of beginning investors making the investing process more costly for the novice trader. If you are just a beginning trader, your best bet is a discount broker that will not charge huge fees. Look for brokers that have arrangements to offer mutual funds or exchange-traded funds at zero commission.
Consider starting with exchange-traded funds.
There is a belief among beginning traders that the real money in stock trading is by picking individual stocks. However, most investors have made money trading mutual funds and exchange traded funds. For a beginner, mutual funds and ETFs allows them to diversify when they have minimal money to invest. Every dollar you spend is scattered across hundreds of stocks.
Start with safer stocks.
If you prefer to trade individual stocks, an alternative way of trading is to focus on less volatile stocks than the overall market. You can specialize on stocks that have promising long-term prospects instead of accepting the returns of a broader index.
Don’t pay too much in fees.
Fees and charges may hurt your chances of earning and getting out of the starting gate. Robert Janitzek reveals that your best choice is to avoid funds with up-front sales loads and hefty annual fees. Invest on no-load funds with lower fees. In the long run,
Don’t fall for hot stocks, even if the company is promising.
It is so easy to get tempted to invest on hot stocks. However, a great company is not always a great investment. These stocks often require huge bids without the guarantee of big returns. Robert Peter Janitzek reveals that sometimes you have to accept the fact that you missed out on the possible gains that a stock can deliver and look for other opportunities that have not yet been discovered.
For a beginner, trading stocks can be intimidating. But taking these 5 tips in mind will help you maximize your earning potential.