Investing in the stock market consists of buying shares of listed companies and other financial assets under a stock exchange. This activity can be a very lucrative act, but if you don't know this art, it is obvious that you will lose a lot of money. For a beginner, how to find the right stock market tips to follow? What are the stock market tips to know?
In this guide, we will present you with the best stock market tips for investing. We will show you which assets to focus on in the stock market to get the most out of your investments. We will introduce you to the brokers that provide advice to their clients as well as the sites that offer daily stock market advice to their clients. Finally, we will present a brief overview of the resources available offline.
Top 13 best free stock market tips for beginners
Investing in the stock market involves a number of risks
It is, therefore, necessary to know the risks of trading, and how to avoid them. We will present you with some tips to start trading.
These tips are not exhaustive but will cover all the subjects aiming at making you get the maximum profit from your investment.
Stock market tip 1: Invest only to the extent of your means
Before investing in the stock market, you must make sure that the investment is within your means. We told you above that investing in the stock market is risky, which means that it is not guaranteed that you will always make a profit.
The money you start within the stock market should therefore not be part of your precautionary savings or money needed for daily expenses or money for important expenses in the future like your retirement savings or PEA.
The money to start the bet should be the portion of your income that you can afford to lose. That way, if you lose your money, you keep your current level of well-being.
If you are ready to start trading, eToro is a good option for beginners. In fact, you can invest in the stock market for as little as €200. An affordable way to buy assets.
Stock Market Tip 2: Set clear goals
Are you investing in the stock market to have money to buy a new car? To increase your portfolio for your retirement? Have additional income for a trip? To invest in the stock market, the objectives must be clear with what you will do with the money.
These are all very different goals, and honestly defining your goal is the first step to successful stock market investing whether you are a beginner or an advanced trader. If you know exactly how much money you want and when, you can calculate what you will need to invest on a regular basis, assuming certain rates of return.
Stock Market Tip 3: Define your risk profile
There is a direct - relationship between risk and return. The greater the risk we are willing to take, the greater our potential gains (but also our potential losses).
Depending on your situation, everyone will be willing to take more or less risk. Before you start investing in the stock market, it is important that you define your risk profile. To do this, you need to ask yourself the following question: what percentage of your invested capital are you willing to lose?
Depending on the risk you are willing to assume, you must choose the investment strategy that suits you best.
Stock Market Tip 4: Get trained and learn how to invest in the stock market
There are many ways to learn about trading. One way to train effectively is to follow the stock market tutorials provided by trading sites. We recommend checking out the tutorials and videos provided by eToro which are the best on the market so far.
Another way is to learn from people who have already invested in the stock market and succeeded. The best way to do this is to read their books or take one of the courses they offer. For example, two books that deal with the stock market that are very good are The Intelligent Investor by Benjamin Graham and The Alchemy of Finance by George Soros. We will come back to this point below.
Stock Market Tip 5: Choose a reliable broker that fits your profile
It is essential to have a good broker. There are many, some are very good and others of doubtful quality. This is why it is very important that you compare and seek information on the broker you are considering using.
Essential criteria include:
- A site regulated by financial authorities: FCA, CySEC, AMF...
- An interface that protects your data efficiently: SSL encryption, 2FA...
- Competitive commissions
- A panel of stock market assets that suit you
- An ergonomic- and easy to use platform
One of the best online brokers for investing in the stock market is eToro. Because of its reliability and ease of use, it offers a great feature for beginners: copy trading.
Stock Market Tip 6: Use demo accounts
First of all, we recommend that you enter this world with a demo trading account
For example, the eToro demo account gives you 100,000 fictitious euros to practice as you please. This way you can test different strategies. Our advice is to use and abuse this account before making your investment in the stock market. It's free and you won't lose a cent by practicing.
Plus, it will serve as a guide for your future as an investor, so don't be afraid to wait, be quick. Enjoy learning, and when you know how the stock market works and how to profit from it, go for it!
Stock Market Tip 7: Focus on technical analysis of stocks
Value investing (which has become so fashionable thanks to Warren Buffet) is based on thorough fundamental analysis. It's a great way to invest for the long term when you already have a solid understanding of the stock market.
However, when you start investing in the stock market, fundamental analysis is too complicated. It is better to focus on technical analysis, which is a chart analysis to try to predict the future course of action. It is much more visual and therefore easier to analyze for beginners.
Stock Market Tip 8: Take into account the liquidity of stocks
n of a value investor.
Technical analysis will allow you to see not only price movements, but also the volumes of shares bought and sold during each trading session. If the volumes of shares traded are high, we say that a certain stock is liquid. On the other hand, if the volumes of shares traded are low, the stock in question is said to be "thin".
In other words, the liquidity of a stock determines how easy it is to get in and out of your position. The easier the trade, the greater the liquidity, and vice versa. So consider this principle before you buy stocks
Unless our portfolio is really small (e.g. a few hundred euros), it is important to consider the liquidity of the stock in question before taking a position. We don't want to be in a situation where we can't exist at the time or price we want because there is no buyer on the other side.
Therefore, when we do our technical analysis, it is important to not only look at the candlestick prices but also the volumes traded in each session to give us an idea of the liquidity of the stock.
Stock Market Tip 9: Understand how market expectations work
Asset prices are not only based on performance, but also on how investors think they will perform. Too many investors don't understand that the market's expectations for a given company are built into the stock price, meaning that it's not enough to invest in a company that will grow above average.
You need to find a company that will grow faster than the market expects it to. This involves analyzing a company's future growth rates better than all of the highly trained professionals in the industry, which is both difficult and unlikely.
Stock Market Tip 10: Copy Trading
If you want a portfolio that matches the performance of investment professionals, copy trading can help. In short, copy trading is a trading activity similar to that of a stock market expert.
The key is to choose a trader whose investment style and goals match yours. For example, if you are a conservative investor, you will copy someone who has a penchant for conservative trading. Similarly, if you are a growth investor, you should not align yourself with the trading activity of a value investor.
eToro is one of the leaders in copy trading or social trading. If you're a beginner trader, this tool can be a great help to you to invest well. You can learn from the platform's successful traders.
Stock Market Tip 11: Invest for the long term
There are several trading strategies. We can mention for example day trading, swing trading, or scalping trading
Long-term investment in stocks allows you to take advantage of capitalization and reinvest your dividends over time. This will actually allow you to generate even greater profits. So keep an eye on several weeks or months when you invest. Indeed, in trading, time is your greatest benefactor.
Stock Market Tip 12: Manage your emotions
Investing is a commitment that requires you to deal with a large number of emotions
In the short term, the market's behavior is often based on the alternation of enthusiasm ("Everyone loves this new product!") and fear ("This upcoming scandal is going to be very bad for business."). So stay aware that as much as the market is volatile and constantly changing, your emotions can change just as suddenly.
Caution: If you are prone to stress and anxiety, ask yourself if this will really be compatible with the discipline and calm that trading requires.
Stock Market Tip 13: Diversify your stock portfolio
Last but not least, don't put all your eggs in one basket. This saying perfectly sums up what it means to diversify your investment portfolio.
You can invest in different instruments in the stock market:
Equities - stocks from several sectors and geographical areas: Google, Orange, Total
Government debt securities
International indices: NYSE, DAX 30, FTSE...
Similarly, you can choose to buy assets from different sectors and of different sizes. This way, you can prevent losses caused by the fall of a specific sector or by the instability of the national market.
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