Trading stocks can be scary. In essence, it feels like betting, you are paying a certain amount of money for a ‘stock’ which will either become worth more or less. In a worst case scenario, it becomes worthless and you have lost all of the money. In a best case scenario, the stock triples and you can sell it with a profit. But how can you tell when the stock will do either?
There are many different theories on this, but testing for yourself is the best way to find out. Do not test with your own money unless you are loaded and willing to lose money. Test on a free online stock trading site. These sites allow you to ‘purchase’ stocks with fake money and track them for you as they are doing in real life. Test out some of your own theories and see how they work. If you make millions in the game, then try it a bit in real life.
Don’t start out with tons of money, just $50-$1000 whatever you can afford. You might surprise yourself with your picks and earnings. But make sure it is money you can lose, because you are new at this and could possibly make a mistake.
This can be a fun and rewarding way to learn about using the stock market. Many of the free online stock trading sites have competitions where you can win prizes or money by making the most amount of money over a certain period of time.
You can learn from your peers. Many of these sites have social capabilities where you can see what your peers are buying and selling. This can help reassure your choices, or make you question them. Find someone who is doing very well and follow them, see what choices they make and why. Don’t copy them, but review their strategy and see how it might fit in with yours.
Using these free online stock trading sites can help you clearly define your market strategy and allow you to enter the real market confident and ready. You know that you may lose money, but you are prepared for it. You understand loss and gain, you need to understand important stock trading concepts prior to buying for real such as buy and hold, selling at certain percentage gains, dollar cost averaging, etc. Make sure that you have seen all of these terms being used and understand their use and their meanings.
Become familiar with all of the basic stock market lingo and theory before touching a stock. Beware of penny stocks too. These can be fun to play with on the free online stock trading sites, but I would not touch them with real money until you were experienced with a few years of trading and making money.
Remember, you don’t need to be a millionaire day trader to make money in stocks. Buy and hold is a wonderful strategy that makes many people rich over time, play with this and the other theories, perfect it and then make some real money!