The stock market is easier to get involved in than ever, no more are the days where you need a broker and a suit. Many intraday traders will use their own capital and trade at home or even at Starbucks. Fundamentally, investing in stocks only requires a device connected to internet and capital at hand. When learning how to invest in stocks, the internet is your friend. The best stocks are not always the most hyped, so be prepared to research..
Firstly, research the companies that you intend to buy shares in. There are features of stocks that traders should look out for, this are what an investor should look for before investing:
- Company should have steady profits.
- Make sure the company has healthy margins.
- Check that there is room to grow in its sector.
- Make sure that the country it is based in is not too volatile.
A company should have steady profits, this is important because it is more likely for them to pay dividends to shareholders. When a company is not in the green, it may have a flawed business model which means that the future of its stock price may not have upside potential. The best stocks are ones that can deliver large-gains and strong dividends to shareholders.
Healthy margins ensures that the company can weather harsh economic downturns. Essentially, this means that even when the overall economy is not performing well, the company does not suffer too much.
The sector is what category the business operates under, for example Apple (NASDAQ: AAPL) is in the tech sector. A company needs to grow in its sector to ensure that is generates profits and stays afloat. If you are a long-term investor, then it is essential that the company you are investing in has growth potential.. otherwise you can lose your money as the company goes under.
If you are investing in a Chinese stock, for example, you will experience volatility that is not normally associated with U.S. stocks. Due to economic volatility is developing countries such as China, the company you are investing in is impacted massively by geopolitics. Trade-wars have proved to weigh heavily on companies this year. Consumer-goods companies such as Alibaba feel the brunt of a trade-war, which increases the risk factor on a stock. Look at stocks with this criteria as a beginner. Once a trader becomes more experienced in investing in stocks, it is easier to see which stocks have potential.
Few companies fit this criteria, but the ones that do can bring life-changing returns to investors. Here are our editor’s top stocks to invest in for the rest of 2018.
How To Invest In Stocks Online
A stock market platform is not only a means of acquiring shares, but it will give you an education about how to invest in stocks. There is no ‘best” trading platform, each one will facilitate a different type of trader. A good trading platform will offer a few things, here is what you should look for in a trading platform.
- Low fees/low commission
- Low account minimums
- Good research tools
Good For Learning On: E-Toro
Unlike many other stock market trading platforms, E-Toro offers a virtual trading platform. With this, you are allocated $100,000 virtual funds and can invest in how you please. For people learning how to invest in stocks, its perfect because you cannot lose real capital. Using real-time charts and resources, E-Toro will also allow you to copy-trade. This is where you can watch other traders invest in stocks/ETF’s and copy what they have done. The best thing is.. it’s free. You can create an account today and check the “best stocks” amongst other investors.
Learning how to invest in stocks has never been easier with E-Toro.
Good For Budget-Traders: Ally Invest
Ally Invest is a low-cost commission stock market trading platform for all types of investors. It is good for beginners due to its inexpensive payment model. There is a zero account minimum with Ally Invest and active traders get a discount.
Good For Beginners: E*Trade
E*Trade is a great stock market trading platform for investors who are starting out. It has helpful educational videos, webinars and articles for stock market beginners. You can also read the stock market news, commentary and reports all from the E-Trade platform. You can use their online chat tools 24/7 if you need to ask their support team a question. If you are interested in investing more funds over time, their platform can handle huge volumes of capital. For options traders, E*Trade is the best trading platform on offer.
Good For Day Traders: OptionsHouse
For investors trading every day (intraday trading), then OptionsHouse is the best platform on offer. It’s pricing is about as low as it gets, with a flat commission of $4.95 (+ $0.50 per options contract). There are no inactivity fees or account minimums, which is also good for passive traders who are just testing the water. The only disadvantage to OptionsHouse is that it does not offer currency trading.
Investing In Stocks Long-Term & Short Term
Stocks are not as black and white as you might expect, what is perfect for one trader may not suit another. The main two types of stocks you need to understand when learning how to invest in stocks are ‘long-term’ and ‘short-term’.
Investing In stocks Long-Term
When a trader will buy in when the stock is priced low, leave it to appreciate, then sell it years after the initial buy for a profit. This style of trading means that you must be prepared for short-term volatility in hopes for long-term gains. To be successful as long-term trading, you shouldn’t be temped to sell off at the first hurdle. All stocks have their up’s and down’s, but the difference is that long-term traders wait it out. The risk behind long-term positions is low, because in theory all issues a company has will be resolved in the long run.. at least that’s the idea.
These are our editor’s best stocks to invest in right now.
Investing In stocks Short-Term
A short-term position is when a trader buys stocks when they are bearish. Days/weeks later when the stock returns to its normal level or higher, the trader will sell off. This is more risky than long-term trading because there is no guarantee that the stock will increase in value in a few days or weeks. Traders who buy and sell a stock on the same day are known as Intraday traders. When investing in stocks, it is important that you know what you want from a company’s shares.
Read our editor’s guide to the best short-term stocks right now.
The best way to learn how to invest in stocks is through real life experience. After reading the basics, try out a platform mentioned above and begin investing in stocks (virtual portfolio to start with) and increase capital as you go on.