Stock market investment for beginners

Stock market investment for beginners is primarily related to gaining knowledge of the financial instruments in which the funds are to be invested. Investing in the stock market is seen by many as something complicated that is available to insiders who have a lot of capital. That certainly comes in handy, but that doesn’t mean you have to be a millionaire and an expert to take your first steps into the world of investment.

Stock market investment for beginners – where to start?

To invest, you need to have a certain amount of capital. These can be low amounts, and should even be so at the beginning. It can be, for example, a few thousand, although some people start their investments with much lower capital. It is also a good idea to fill out a MiFID questionnaire, which will help the investor make appropriate investment decisions. Thanks to such information, those who invest can protect themselves from investing their capital in financial instruments that carry a high investment risk.

If a person interested in investments, has the right investor profile, he can decide, for example, to buy units of ETFs, which are designed to reflect certain baskets or indices (read more: Exchange-Traded Funds). This allows investors to so called paralyze behind the market. In this case, too, it is important to remember the risks, especially at the beginning of one’s investing adventure. Stock market investment for beginners should be subject to investing funds in the least risky financial instruments possible. You should also not allocate all your savings to investments.

Wanting to build an investment portfolio on your own, you need to learn how to do it. Although it is not very complicated, you need to spend some time to learn the basics. An investor needs to learn how to manage risk, as well as what investment risks are associated with each financial instrument. It is also useful to know how to choose stocks for your portfolio and how to use all the news and information. A beginner investor also needs to know how investing technically works, how to calculate profits and how this type of activity looks in terms of taxes.

Learning how to invest in the stock market is, of course, possible from books, online blogs, portals and training courses. Sources can be chosen freely – it is important that the authors of the materials are people who have professional knowledge in this area.

Stock market investment for beginners – basic concepts

To begin with, every investor should know what specific terms in the stock market mean, as well as what the stock market itself is and how it works. Without this knowledge, there is no point in starting the topic – how to invest in the stock market?

The stock exchange is a place where transactions are made to buy and sell many different financial instruments, such as stocks, bonds, futures, etc.
Money is invested on the stock market, of course, in order to make a profit. These can be in the form of a higher price for the securities purchased, interest, as well as dividends. At this point it is worth explaining what the term dividend means. It can be a bonus from the profits of a company whose shares the investor owns.

Any transaction can be made during stock market sessions. By contrast, electronically, orders can be placed 24 hours, 7 days a week. They enter a pre-opening phase, when the submitted orders are entered. This phase begins at 8:30 a.m. for stocks and derivatives.

How to invest in the stock market? Also know the next two basic terms, namely bull market and bull market. The latter means a long-term increase in stock prices, and the former is a decline in the price of securities.

Who is a shareholder?

Anyone can go and buy shares in a company of their choice and thus become a shareholder. A beginner and a layman may think to himself that, after all, this is an expense, not a profit. So how can any profits be generated? Simply put, if a company starts to grow and generate some profits, the shares it consists of will be worth more. The value of a company depends on how much a shareholder can earn from them in the future.

Can anyone invest, even a beginner?

Of course. Even a person who has no training in this field and is a complete layman can choose to invest in the stock market and successfully profit from it.

Stock market investment for beginners – how to start playing the stock market step by step?

Of course, you should always start with theory, but when an investor wants to start investing in the stock market, where should he start?

Step 1 – choosing a brokerage house

Any person who intends to make transactions on the stock exchange must set up a brokerage account. Without it, you can’t move. Fortunately, this is not a major cost. It is worth spending some time on the choice, because it can be the first good decision towards investing in the stock market. A brokerage account can be opened by a person who is 18 years of age or older, and it can be a sinking company as well as an individual.

In the account, the investor keeps money, which is used for investment. It is also a store of securities in an electronic version. Brokerage accounts can be divided into 2 types:

• With a relatively high fee charged for account maintenance, but with much lower commissions on transactions,
• With either no account maintenance fee or a low fee, but high commissions on transactions.

Stock market investment for beginners should include comparing and choosing the best brokerage account. However, before an investor decides on a brokerage account without fees, he or she should check how much commission he or she will have to give up on each transaction. For those intending to invest for the long term, a no-fee account may be a much more cost-effective option.

On the other hand, if the investor intends to buy and sell financial instruments frequently, it may be better to pay for the maintenance of the account and a lower commission. It is worth noting additional fees, such as for transfers from the brokerage account.

Brokerage accounts differ not only in terms of cost, but also in terms of additional offerings. Many of them offer educational materials, quotes and market news. Stock market investment for beginners should start with just accessing and acquiring such knowledge, as it is at a premium.

Step 2 – a brokerage account at a bank

Also banks have brokerage accounts in their offer. The possibility of opening a brokerage account exists at different banks. There are many options to choose from, and it is best to check what is offered by the bank where your business, personal or savings account is held before making a decision. You may find that by opening a brokerage account at “your” bank, you will be able to bypass the account opening fee.

Step 3 – opening a brokerage account

Once an investor has decided on the brokerage of his choice, he can open an account. The contract can be signed in person, by going to a customer service center, or by choosing the option via courier.

In addition to signing the contract, a MiFID form must be filled out, which is several pages long. This is a form that was introduced by the European Union, and its purpose is to determine the profile of an investor. The questionnaire consists of questions that address the investor’s attitude to risk, experience, knowledge of investing, as well as his or her goals. It also includes questions that relate to the investor’s financial situation.

How do you get started investing in the stock market? Just by opening a brokerage account, and this can also be done online. All you need to do is apply to the bank with which you have a business or personal account.

Step 4 – the first transfer to the brokerage account

Once the investor has signed a contract with the brokerage, he can move on to the specifics. It is necessary to make the first transfer to the brokerage account. However, deciding how much to allocate is not easy.

On the other hand, if the investor is just beginning his adventure with the Stock Exchange, this amount should not be high. It is best to invest exactly as much as you can lose. Of course, the stock market especially for beginners seems to be a great idea to multiply money, but not everyone gains. On the contrary, many investors, even the best ones, often lose money, and not much of it. Every type of investment is associated with some risk.

When considering how to start investing in the stock market, it is worth considering first of all what amount to allocate for this. It is worth taking into account:

• what amount from savings the investor is able to allocate to investing,
• whether he intends to buy securities in a sequential manner, and how much, more or less, on a monthly, quarterly or annual basis, he is able to allocate for this.

You should never invest all of your money in the stock exchange for a simple reason. The chance to win is for those investors who have a diversified investment portfolio and a specific pool of money for a black hour.

First of all, the question of how much money an investor is able to allocate is important. With what amount will the investor be able to part with and will not be painful for him? This is also the point at which the novice investor should realize that investing in the stock market is, of course, intended to generate profits, but it also involves risk and loss. Every trader experiences this, whether a beginner or an experienced one, and especially a young one who is just learning.

So what should be the amount of money allocated for investing at the beginning of the journey? There is no clear answer to this question, as the answer depends on, among other things, income, assets and savings. Each investor must answer this question for himself.

Step 5 – buying shares

After setting up a brokerage account and depositing funds into it, it is time to make the first transaction. This can be done either online or through a bank/brokerage application. When deciding to make the transaction in person, it is worth figuring out what the cost is. In addition, you can use stock call options:

• At any price – in this case, the investor specifies the number of pieces, and they will be bought at the price found in the quotations,
• With limit – in this case, the investor specifies the maximum price he is able to pay with 1 piece, as well as the quantity.

Stock market investment for beginners does not have to be difficult at all. It is enough to learn the basic steps and concepts to start investing.

After a specific transaction is made, securities will z be in the investor’s brokerage account. Instead of funds, the account holds bonds, stocks and other derivatives in electronic form (read also: Investing in stocks and bonds). Everything is supervised and controlled by the National Securities Depository. All information that pertains to transactions goes there.

Stock market investment for beginners – what to invest in at the beginning?

Investing in stocks is considered relatively safe (read also: How much money can you make on stocks). There is never any certainty, but buying and selling shares is easy and possible almost every session. As for the disadvantages, there is the possible bankruptcy and insolvency of the company, as well as the fact that the investor has no influence on how the company’s fate will turn out.

Sale of securities

It is done in the same way as buying it. Learning how to invest in the stock market should also include this issue. The disposition is the easiest and cheapest to make online. The selected brokerage house transmits the specific instruction to the Stock Exchange.

After the sale, the funds are transferred to the brokerage account and the investor can then withdraw them to his personal account. This usually takes one business day.

For what reason do companies enter the stock market?

When deciding to invest in the stock market, it is useful to know why do companies enter the stock market? For the reason that they need money for development. By issuing shares that are sold, the company draws money for growth. As a result, companies will grow stronger and the stock price will have a higher price.

How do you choose a company to invest in?

In order to make a good choice, it is necessary to analyze whether it pays to invest money in the shares of a certain company. The investor has a good chance of making a profit if he buys cheap shares of a company. The idea, after all, is to buy cheaply and sell more expensively. Of course, it won’t be easy for an investor who is new to the stock market to find out which companies have low-priced shares. To assess whether a company’s stock is at an attractive price, it is useful to use the PE, or book value per share.

Stock market investment for beginners should start with a solid dose of knowledge. It’s also worth knowing exactly what the PAC value is. This is the value that is obtained by dividing the company’s assets by the number of shares that have been issued. When current prices are lower than the CCI, it is worth taking a closer look at this type of company, as there is a chance that the price will rise. However, this is influenced by many factors.

When choosing a company, it is important to take into account whether it has not brought a takeoff in recent months. It is also worth deciding on the type of analysis that will help make the right choice. Investors can use either technical or fundamental analysis. The technical one takes into account the condition of the economy and the issuer, while the other is based on the study of previous stock charts.

Other online stock exchanges

How to start playing on the stock market? First of all, you should know that the Stock Exchange is not the only place where you can invest. Good profits can be achieved by using online trading platforms that have been created for online trading. In this case, you do not need to limit yourself to the market only. On such platforms, which are offered by eToro, among others, you can invest your money in markets from all over the world.

What can be invested in?

There are many financial instruments available to the investor, including those that cannot be found on the stock market. Other examples of available markets are cryptocurrencies, commodities, indices or Forex (read more: Investing in cryptocurrencies and What is the best currency to make money on or Forex market and Online forex). Stock market investment for beginners can also include oil cza Apple. On the other hand, thanks to mobile apps, it can be done at any time and from anywhere in the world.

Read more: Forex investments

On online stock exchanges, investors have a choice of both short-term investments and long-term investments. Because of this, investing on the stock market is extremely easy and does not require special knowledge, only deepening it. In addition, on platforms you can earn extra for referrals or take advantage of promotions, which on the stock market is not possible.

How to invest in the stock market?

To begin with, all you need is a computer or a smartphone. Investment platforms offer easy-to-use, yet powerful tools with which you can trade online. To start investing in the stock market, you need to choose a platform for making investment transactions.

Stock market investment for beginners should start by reading the education section on the investment platform. This will help the investor become familiar with basic terms and learn how to manage an investment portfolio.

The best brokers that provide investment platforms offer an interesting option, which is the ability to copy traders’ movements. This allows the trader to preview the best traders in real time and duplicate their moves at the same time. The advantage is that there is no additional charge for this type of feature.

Support for beginners

Support includes not only the ability to copy the movements of the best investors or tutorials on the platforms for beginners, but also the community that is centered around the platform. Investors can learn a lot from each other, if only by following each other’s statistics, portfolios or risk ratio. However, not only that, as also through conversations, as well as sharing insights.

When choosing an investment platform and not knowing English, check whether it offers support in your language.

Stock market investment for beginners – factors, affecting the price of shares.

The stock market is governed by its own rules. The stock price is mainly an attempt to assess the future profits of a company. This is influenced by various external and internal factors, including the product that the company offers, its strategy, the people running it, the prospects for economic growth, etc. However, not everything can always be predicted.

The stock exchange process is overseen by certain institutions, which have control and custody of certain institutions. The stock exchange is controlled by the Financial Supervision Commission, which oversees compliance with the rules of fair trading and keeps an eye on public access to reliable information.

What influences changes in the stock market price?

What condition a particular company is in depends on what condition its fundamentals are in, as well as the care taken to develop it, etc. It also depends on various external factors. What condition a company is in is influenced by the work of the people who make it successful.

An example is Nokia, which started having problems because it underestimated the iPhone. When it entered the market, Nokia engineers tested it and found that it was not a threat to Nokia, because it was too expensive. iPhone could not send MMS and it ran on a second-generation network, but a year later this changed. iPhone was improved, and Nokia was left behind and did not catch up anymore.

Impact of external factors

Stock market prices are affected by all events that take place both domestically and internationally. Investing in the stock market for beginners also means learning that every event has a greater or lesser impact on what happens in the stock market. An example is the economic crisis that happened 10 years ago. The third factor is random events and wars. Any disaster will affect the stock price.

Read also: Best CFD broker and CFD trading

Stock market investment for beginners – how to make money in the stock market?

Most beginners are waiting impatiently for the answer to this question. Making money in the stock market is as possible and looks the same way as making money in any other business. An investor wants to buy something and then sell it for a higher price. The stock market is a bit more complicated, because in this case you can also make money by not selling shares.

Dividend – how to make money without selling shares

The payment of dividends can be proposed by the board of directors and the final decision made by the owner at a general shareholders’ meeting. In addition, anyone can go to this type of meeting who has at least one purchased share, and thus can participate in the vote, although the strength of his vote depends on the number of shares held.

If a novice investor does not know, and how to earn dividends, then he should know that dividends can be paid only in the year in which the company made a profit. All usual shares are entitled to pay the same dividend. In order to receive a higher dividend, one must have preferred shares, which are usually held by the company’s founders. The dividend depends on the decision of the company’s board of directors and is always related to the amount of profits earned, as well as to the company’s development plans.

How to invest in the stock market to make money? It is important to remember that on the stock market you earn money from changes in stock prices – you do not earn mainly from dividends. For this reason, investing in the stock market can be associated with high than deposits. However, it should be remembered that it may happen that dividends are not paid for years. What should an investor do then? Sell the company’s shares? If the investor decides to do so, he should wait until their value rises, to a price higher than the one for which he bought them.

Read also: How to invest in stocks and How much money can you make in stocks

A share is a stake in a company, so its value depends on the value of the company, that is, if the company weakens and generates a loss, the shares also lose. They may be worth less than when the investor bought them. It is sometimes worthwhile to sell shares of a company that is starting to lose assets early. In this way you can limit the loss.

Stock market investment for beginners – characteristics of a good investor.

Investing in the stock market is always associated with risk, and this in turn is associated with emotions. So what character traits should a successful investor have?

A complete layman and a person who does not have any idea about the stock market should do a training of how to react to a loss. Not only real, but also mental. Just think about how he will react when losing, for example, USD 100,000. This is very important, because the human brain acts in the same way on both reality and fantasy.

Patience is also important, as well as the ability to anticipate, but with humility. It’s all about tactical humility, which is that the uncertainty that accompanies movements in the stock market should be tamed by the idea that you could be wrong.

How to invest so as not to lose?

First of all, you need to have a strategy. This is a plan that you should set for yourself and consistently follow it.

In order to create your strategy, you should ask yourself a few questions:

• How much money can be invested?
• What should be the expected profit?
• What losses can you afford?
• How long can you freeze your funds for?

Stock market investment for beginners should be cautious, and at the very beginning one should invest small amounts such that one can lose. The decision on what the investor will invest the funds in depends on this. Investors who think that a loss of capital of more than 10% is a tragedy should decide not on stocks, but on bonds. In this case, the guaranteed profit is lower, but they are also characterized by lower investment risk. Those who are not frightened by the vision of a higher capital loss can invest in a more aggressive way. This, however, requires a lot of discipline and spending more time watching the market.

Diversify your investment portfolio

Although this may sound a bit complicated at first glance, it simply means that, having, for example, an amount of, say, USD 10,000 at your disposal, it would be best to divide this sum into several different investments, into different companies from the age of industries. Because if one of them suffers a loss, the investor will not be left with an empty portfolio, as there will be other companies. When diversifying your investment portfolio, it’s also worth keeping different industries in mind. Do not put your money in companies from one industry, because it so happens that entire industries go through a crisis, while others thrive.

Stock market investment for beginners – why do people invest?

Investing in the stock market is motivated by various issues. One of the motivations is certainly the failures suffered, that is, what has gone wrong for investors. Investors are also motivated by anger, which is a very strong emotion and has the power to make things happen. However, it should not be the case that this is the only motivation that drives a trader to invest.

The motivation is also often the desire to earn money, but on the other hand, stock market history has recorded quite other reasons why people decide to enter the stock market, if only for the aforementioned reason of anger.

Is it worth following the crowd?

Stock market investment for beginners should be very cautious. Unfortunately, many novice investors get carried away by their emotions. They are guided by the opinion of the public, friends or everywhere present advertising that promises great profits. This is called sheepish momentum, that is, buying or selling shares rapidly without any justification. If there is a sudden fad to buy stocks, their prices rise strongly. An inexperienced person is then very happy that he is just making the deal of a lifetime.

Unfortunately, the high prices are not covered by the company’s real financial situation. Their price soon drops to a level that reflects reality. But on the other hand, novice investors should not throw themselves in at the deep end and make heavily risky decisions. The worst choice is to follow the crowd.

The most important thing is to assume whether the investor is targeting short-term or long-term profits, whether he can afford to wait, and whether he is hoping for a quick profit. The chosen strategy is also related to market observation.

How do you predict changes in stock market prices?

Probably many investors are curious if it is possible to predict when stock prices will go up and when they will go down. There are specially designed tools for this. Learning to invest in the stock market should include an explanation of certain analyses.

Fundamental analysis

An investor chooses a company and looks at how it is managed, how much it earns and what orders it has, that is, he pays attention to its hard fundamentals. This is what should count. By doing so, he is able to estimate the value of the company. However, common sense thinking is not the only important thing. Impression and the opinion of others also matter. For this reason, there is also a second type of analysis.

Technical analysis

In this case, it is worth looking at the charts. Checking historical data, it is worth trying to determine how long it will go up and when it will start to fall.

Despite various studies and methods, the stock market cannot be predicted one hundred percent. For this reason, it is worth having a plan on how to mitigate risk, that is, how to protect yourself from losses that are sure to come one day.

Investments for beginners – what to do when the crisis hits?

The biggest crisis in the history of the stock market happened in 1929 in the United States. It was called Black Thursday, and that’s when the economic crisis reached its climax. Almost all stock prices fell sharply, entailing debt and bankruptcies, which affected virtually all countries. Of course, this was not the first such case, but this one was on a global scale. That’s when many people realized that the stock market is not a money-making machine.

In many countries the hardest time for the stock market was in 2008. The crisis on the stock exchange at that time was probably caused by the general economic crisis that prevailed in countries around the world.

Why is a bear a bear market?

The symbol of a bull market, i.e. prolonged declines, is a bear. Why? Because a bear uses powerful paws to attack and to crush its prey. He makes a movement from top to bottom, which reflects the decline in stock prices.

Why is a bull market a bull market?

Learning to invest in the stock market also means learning all the terms, related to investing. A bull market is a time when there is a prolonged rise in stock prices on the stock market. This is symbolized by the bull, which attacks with its horns and thus makes an upward movement.

Is it worth buying stocks during a crisis?

During a crisis, it would be best for everyone to make their own decision. However, it is better to wait out the biggest crisis and not make too sudden a move. According to experts, during a storm it is better to stay at home and wait calmly. It is best to accept small losses and sell shares quickly. Then you can protect your capital from too big drops. However, there is a third thesis that the best decision is to invest in the stock market during the crisis.

How to start investing the stock market? In a nutshell

Here is a short guide that every beginning investor should remember:

• First of all, it is necessary to acquire the right knowledge. It is advisable to read various guides and start taking an interest in investments and economics, not only in the domestic market, but also in foreign markets,
• One should learn how the stock market and brokerage houses function,
• Before an investor starts investing in the stock market, he should remember to choose and set up the right brokerage account (read more: Brokerage account for beginners). You need to analyze all the additional costs, as well as check whether the chosen brokerage house has a license, which was issued by the Financial Supervisory Commission,
• Once all the formalities have been completed, you can start investing in the stock market. You should only trade in amounts that you can lose.

It is always important to keep in mind that the situation of the companies in which an investor invests his funds changes. This is usually related to the economic situation in the country or the world. Before a person starts investing in the stock market, he should practice before investing in the real stock market. The ideal place for this would be a stock market simulator or a demo account on an investment platform of your choice. Most brokers provide this for free.

It is worth remembering that in the stock market you should not invest by chance. Every operation should be well thought out and recalculated. A good way is to draw knowledge from various guides or websites. This will allow a beginner to get acquainted with the market and learn the aspects to pay attention to when investing. A great way for novice investors is also to use experienced stockbrokers to help them get into the market.