how do you get started in stock trading and do you need a lot of money to start? is it really that risky?

Answer 1

Congratulations on getting started. It’ll help you more than you know!

It's most risky for those who just gamble w/o knowing what they're doing vs. those who learn and stack the deck in their favor.

Your first dollars should be spent on getting educated on investing. You don't have to train to trade them professionally, but we are talking about your future here. So the more you learn, the more it'll help you! So let's start there.

You ask a very broad question, so be prepared for a pretty long answer. Just take it in chunks!


How to invest depends on what you already know. We'll assume that you're beginning!

A good primer is How to Make Money in Stocks by William O'Neil. You can get it cheap just about anywhere. It’s widely available new or used.

Another good one is one of Jim Cramer's books like Real Money (he’s got a few).

But books will only get you so far. At some point, you'll also want to get at least a little training. There are some great education companies if you want to make the investment. Investools.com or optionetics.com are both very good companies as is tmitchell.com who teaches trading futures.

For free, you can start by visiting thestreet.com and investopedia.com. That'll get you a pretty good primer so at least you'll understand what the markets are and what a stock is, etc.

If you get a chance, watch Mad Money on CNBC. Don't trade any of his picks until you track many of them over time. Just use the show to get you to understand some basics and get a feel for the market itself.

Next, subscribe to something like Investorsbusiness daily or something like that that can help you identify good stocks.

Once you understand stocks, go to 888options.com. It's a website that'll help you understand options (what they do, how they work, etc). You don't need to trade them, but the more you know, the more you'll see how options can really be the safest way to invest (once you're educated).

For discipline (which is crucial to successful trading), probably Trading in the Zone by Mark Douglas or Mastering the Trade by John Carter

I know that’s a LOT to absorb. Just take it one step at a time for now. Start with a book or two to give you an idea of where to begin. Take your time, and let it seep in.

As you get up to speed, you should papertrade to practice (highly recommended). This should help reduce your losses in the beginning as you get used to buying/selling.

You can practice for free on almost any reputable broker site (optionsxpress, scottrade, thinkorswim, etc). And yes, you can definitely deal easily online.

Start slow, then as you figure things out, you can buy more shares.

Congrats again on getting started. If you have any questions, please let me know.

Hope this helps!

Answer 2

You can get started with as little as 1000 dollars. The amount of risk depends on the stock. Each one is different.

I borrowed 10 000 dollars to invest in a single income trust. That is risky but it has paied off okay.

Avoid penny stocks or stocks that have been around less than a year.

Buy big name stocks that you recognize. The more research you do on the company,products, and People in the company, the less risky it will be.

Avoid companies that everyone is talking about. Everyone is buying them and that will cause the price to be unrealistically high. Grocery stores and places like wal-mart are boring but relatively safe.

The easiest way to lose money quickly is panic selling. If you see your stock take a dip and you sell right away, you will lose the difference on the price and the commission. All stocks will dip now and then. After 10 panic sells with a 1000$ stock, you will have lost 20% on the commissions alone.

Answer 3

I couldn't agree with Michael K more. If you want a bigger return, the risk goes up higher. You need to educate yourself before jumping in the stock market. A good site you can start is http://www.top10traders.com It's a free site that let's you trade with play money so that you can get the feel of what real stock trading is all about without losing any real money. You'll learn a lot. Good luck !

Answer 4

Some great answers so far, I'll concentrate on the getting into stock trading portion. There are some online stock traders that require no initial deposit. I use buyandhold.com, an online broker. I pay 14.99 a month for unlimited trading. There are some stipulations though, such as only being able to buy and sell in certain "windows". But you can make real-time trades as well for a fee.

Just start researching companies you are interested in, check out yahoo finance for numbers, and fool.com has a great discussion board as well. Happy investing!

Answer 5

You need about $2,000 US to open an account with most brokers, some require more. All stock investments are 'risky' compared to risk-free investments like treasuries or savings accounts. Active trading requires more money and a lot more skill; you are competing with people and institutions with expertise, experience, and large amounts of capital. Spend some time learning about the markets and about how to choose investments before you start trading, or you will lose what you have; read "Securities Analysis" by Graham & Dodd, spend some time on www.investopedia.com and in yahoo finance.

Answer 6

Almost all active stock traders underperform the market. I wouldn't recommend becoming a "stock trader" to anyone.

What I do recommend to everyone is to become an investor in index funds. Index funds are much more stable than individual stocks, have very low costs, and perform amazingly well. Getting an average of 11% per year in the long run is not unexpected.
$2,000/year for 35 years at 11% = $700,000

In addition to just investing in index funds, it's important to take tax consequences into consideration. If you start a ROTH IRA, you can invest up to $4,000 in 2007 and $5,000/year after 2007 fully tax deferred, and when you withdraw the money in retirement it is completely tax free.

My favorite mutual fund company (that has index funds and allows ROTH IRA's) is Vanguard. You can read about their ROTH IRA options here:
https://flagship.vanguard.com/VGApp/hnw/accounttypes/retirement/ATSRothIRAOverviewContent.jsp
Their Target Retirement Funds are amazing, especially if you want to invest your money and never have to worry about it again.

You need $3,000 to start a ROTH IRA in an Index Fund with Vanguard. If you don't have that much you could consider T Rowe Price, they have no minimum if you set up automatic monthly contributions.

Answer 7

You can't succed in binary trading without a strategy, a good method to follow and some kind of software support. They program I use is called "Autobinary signals". It helps finding loopholes for guaranteed returns. It's very easy to use and I'm earning good money. You find all the details on this site: http://tradingsignal.toptips.org

Answer 8

Yes it's risky.
Easy to start to lose money..do it without an education!

I recommend a course in learning to trade with options.
Only use money you can afford to lose...and you will lose..everyone does...it goes with the game.

When you're ready look up a broker online or use the phone book and open an account...put money in the account and your set.