When you’re just getting started in the stock market, you might feel tempted to let a broker handle your trades. However, if you know which stocks to buy now, you can execute trades yourself and generate more profits.
A broker makes trades for you based on what will put more money in his or her pocket. If you’re managing your own investments, on the other hand, you can focus on what will help build your own wealth.
That’s why I help people determine what stocks to buy now through my various publications. It’s my goal to show people how they can use healthy stock picks to grow their portfolios.
Let’s look at some of the most important things to take into consideration when entering the stock market as a beginner.
What Are Stocks?
Stocks are slices of a particular company or entity. A company issues stock to raise money for various expenses, from expansions to new products, and people buy shares of stock to profit from those shares down the line.
Every stock has a price. For instance, if the stock price is $10 and you buy 10 shares, you invest $100 in that company. If the stock price increases to $12, you can sell your shares of that company for $120, which results in a $20 profit.
Larger positions — the amount of shares you buy in a particular stock — result in greater profits as long as the stock price increases.
You need to know which stocks to buy now so the shares you purchase don’t decline in value. If, for instance, the $10 stock you bought dips to $8, you could cut your losses and sell for $80, resulting in an $80 loss.
That’s what I help investors prevent by sharing information about the best stocks in which to put their money.
How Does the Stock Market Work?
The stock market works by enabling companies, investment banks, and individual investors to invest their money in stocks they believe in. You can hold onto a stock for as long as you want — people often hold blue-chip stocks for years — but many investors only hold stocks for hours, days, or weeks.
I focus on short-term investments because they often reap the most profits with minimal risk.
Some investments warrant longer-term plays. For instance, determining the best oil and gas stocks can help you build money over time. Since oil prices rise and fall continuously, you can find solid companies in which to invest, then wait until you hit your desired peak.
There are several ways to trade stocks. You might have heard of the New York Stock Exchange, NASDAQ, and other large exchanges. There are also over-the-counter stocks, or penny stocks, which don’t produce as much value.
When you decide to invest in the stock market, you get a brokerage account. The broker enables you to trade stocks based on the money you put in your account. Each broker sets a minimum initial contribution to the account. It can range from less than $500 to $20,000 or more.
How Do You Know Which Stocks to Buy Now?
You can decide which stocks to buy now based on myriad theories and strategies. Some people pick stocks on a whim, but those people often lose their money. You’re better off taking a data-based approach.
Instead of learning to read complex charts and fundamentals, you can rely on stock picks. Signing up for the Money Calendar Alert, for instance, will teach you how to invest in the stock market without a lot of legwork on your part.
You can also pay attention to CNN, MSNBC, and other media networks that provide information about various stocks. The only problem is that everyone else sees that information, too.
Most importantly, I advise you to avoid listening to promoters who send out emails or social media posts about stocks to buy now. These promoters get paid to “pump up” the price of a stock, and many people who follow the picks wind up losing money.
How Do You Execute a Trade?
The most basic stock trade involves buying a specific number of shares of a specific stock at a particular price, then selling those shares for a profit. Your goal is to reach maximum gains without risking potential losses if the stock price drops suddenly.
Some people trade over short periods of time. For instance, pennystockers often hold their positions for just minutes or hours. Day trading involves buying and selling the same shares of stock within a single trading day.
Other investors hold stocks for long periods of time. They’re often saving for retirement or other expenses, so they’re comfortable keeping their money in the market. They’re more likely to choose blue-chip stocks, which hold their value reliably and pay dividends.
If you want to make money quickly, however, you have to take a shorter-term approach to the stock market. Holding onto your shares for seven days or fewer, for instance, allows you to collect profits almost immediately.
What Influences Stock Prices?
Supply and demand is the most basic influencer of the stock market. When supply increases, demand decreases, and vice versa. You might have learned that in economics class.
Let’s say that a stock is priced at $100 per share. Suddenly, lots of people begin selling their shares in that stock. The supply increases on the open market, which means that demand decreases. There are more sellers than buyers, so the stock price goes down.
The opposite can happen, as well. If there’s considerable demand from people who want to buy a stock, but fewer sellers, the stock price increases.
Historical patterns in stock prices also influence current stock prices. In other words, history repeats itself. If you look at charts — also called “technicals” — you start to see patterns emerge. Stock prices rise and fall at unbelievably regular intervals, and that’s when you want to pay attention.
You can also consider a company’s fundamentals — its financial health, recent acquisitions, total debt, and other details. For instance, when a company suddenly expands into a new market, the stock price often rises. People have more confidence in that company because it appears financially stable.
Which Stock Market Terms Do You Need to Know?
Before you figure out which stocks to buy now, you need to know industry jargon. The following terms will help you navigate the stock market and better understand advice from experts.
- Bear market: Occurs when stock prices fall
- Bull market: Happens when stock prices increase
- Blue chip stocks: Stocks from older, extremely stable companies
- Day trading: The practice of buying and selling shares in a stock in one day
- Stock symbol: Between one and four characters that represent a company on the stock exchange
- Exchange: A market platform through which stocks and other investments are traded
- Volatility: The degree to which a stock price fluctuates
- Order: The bid you place to buy or sell shares in a given stock
- Bid: The amount of money an investor is willing to pay for a stock
- Ask: The amount of money a seller is willing to accept for a stock
- Spread: The difference between the bid and ask prices
How Much Money Should You Invest in the Stock Market?
The amount of money you spend in the stock market depends on your risk tolerance. In other words, how comfortable are you with risking a certain percentage of your total brokerage account?
When you have a low-risk tolerance, you don’t want to risk more than 1 to 2 percent of your total brokerage account on a single stock market play. Those with higher risk tolerances and more money in their accounts might risk up to 10 or 20 percent.
In terms of your overall brokerage account, deposit whatever amount of money you’re comfortable with. For instance, you might have been saving money in a separate account specifically for this purpose. Once you reach your goal, open a brokerage account and begin trading.
Some people start with just $500 of capital, while others deposit $20,000 or more in their brokerage accounts. It all depends on your financial situation.
I enjoy helping people decide which stocks to buy now. That’s my goal for every publication I run. Using proprietary technology and years of experience in the stock market, I choose stocks that I believe will have enormous gains over a short period of time, and then I share those picks with members.
If you’re interested in capitalizing on the stock market, but you don’t know which stocks to buy now, join my Weekly Money Call. Every Monday, I’ll send you an alert with at least one stock pick so you can profit from my technology.