How to trade in stocks for dummies

stock market for dummies
Written by Chidera

Investing in the stock market for dummies. So you wish to invest in stocks right? It is such a wonderful idea. Well, to make the most of your money and decisions you will make, stick around and I will give you insights on how you can maximize your outputs.

stock market for dummies best free guide

Inasmuch as investing in Stocks might not be as simple as a visit to the local grocery store where you pay money to get goods at the fixed price. you can still have much more than that, fun and more money in your pocket.

To become really great in stocks you have to familiarize yourself with all internet tools that can mimic and help you fully practical the stock market and then you need education on how to make stock investments in an efficient manner.

But before we go any further on how to make your investments, I would explain what the stock market is really all about, so you have a general idea of what you are getting into.

Facts about the Stock Market for dummies.

  • Stocks are not just about placing money, it means you are literally buying a company (or at least a part of it).
  • Investing in stocks is not just about the upward info-graphics you see, it is because that company is making a profit and you wish to become a part of its long-term success
  • When you buy stocks at any moment when a company is not making money, then you are not investing but speculating that it just might in the future.
  • You should never make stock investments with a 100% of your assets, it should be your spare money.
  • Not all stocks are actually worthwhile investments, some are simply too volatile.
  • The value of a stock is not actually in the price, it is dependent on many factors such as the environment, customer base, industry, general economy and political climate.
  • Simply utilizing your intuition may not be a good idea, you should see counsel and train yourself before investing.
  • Even when you do buy stocks and hold onto it, it is required that you keep monitoring, evaluating and making sure you have made the right decision to hold onto them, if not then you should consider selling.

Before investing, what you should know

When you have decided to invest in stocks, you should ensure to do a research on the company you wish to invest in, the following are the list of documents you should read about that company:

  • The Company’s annual report
  • The 10K and 10Q reports about the company with the SEC
  • Standard and Poor socks reports
  • Reputable stock investing websites.
  • Value line Investment surveys.

We recommend you read the tips for choosing an online stockbroker for more ideas. In addition to this, you should check out the following links to resources about stocks and its investment potentials.

Related: 10 Best Apps for Trading Stocks

How to buy Stocks.

When you wish to trade in stocks, there are five main ways you may purchase or sell your stocks:

Market orders

This is actually the most popular. in this type of stocks, your broker sells your shares at the best price or buy shares at the present price. This kind of orders are almost immediate and typically they bring in the lowest profits.

 Limit orders

At this instant, you will tell your online stockbroker the price you may be willing to sell or buy your stocks. The order will only be executed (buy or sell) when your price has been reached. However Limit orders have a bit of a downside, if a stock falls further than the price you set, you might only sell some of it but not at the price you placed in the first place.

Stop market orders

With this, you will set a price that you want to buy or sell shares at but in this, when the stock hits your designated price, your order instantly converts to a market order and executes immediately.

Stop limit orders

With stop limit order, you can customize your stocks, you can set both the activation price and can customize the price if the stocks fall below your expectations.  When a price is hit, the order turns to a limit order, and the stock is sold or bought at that price.  Also, if your stocks fell below expectations, your broker might fill orders as soon as possible, but unlike the stop order, you will not be able to dump the shares when it falls below your limit price.

Related: 10 Popular Websites For Trading Stocks (For Beginners)

Trailing stops

Normally, limit orders may be either executed or they will expire. With Trailing orders, you can fix this problem by telling your broker to sell a stock if it falls by a certain percentage or point.

Please note: A lot of brokers may charge a bit extra for limit orders, therefore, you need to check out all their feels before you start trading, In addition, some of them may not even offer limit orders as well,

Tips you should consider when buying stocks.

 Lots and how they work:

When people buy the same stocks over and over again, each time you buy that stocks, it is called a lot. When you sell, your broker assumes you would sell only the lot you have held for the longest time in records. When you do want to sell a specific lot, do ensure you tell your broker that in very clear terms.

Setting time frames:

You can only enter an order for s stock when it is active for the day you place your trade. if you do not fill the order, then it expires. You can also order and let them stay active until you cancel them

Placing rules:

When you issue an “all or none” restriction, your broker will have only two choices, completely fill the order or not fill at all.

Related: 15 Ways To Invest Money And Make Good Returns

I know investing in stocks may be very overwhelming and you might some cold feet at first, but it is really just the same as buying and selling wares in the market, only with a few extra pros and cons. You should add this way of making money to your investment portfolio, you never know, it may pay you back in no time as long as you have got the determination and grit required.

About the author


Chidera is an experienced freelance blogger and social media enthusiast. Click here to see all my posts