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Stock Market Investment Guide For Beginners

A person who is considering the stock market as a means of making money has to do it seriously, and not treat it like a pastime. Thorough research needs to be carried out on the companies whose stocks look interesting for buying or selling. It is all about correctly predicting the change in price of a stock sometime in the future. This is not achieved by taking a gamble or a lucky guess; there is logic and skill involved, and of course, a very small amount of luck.

Before one begins live trading on the stock market, they should follow the traditional paper trading approach of placing the trades on paper and calculating the profit or loss that would have occurred if this trade was real. The graphs of a few interesting stocks can be plotted on graph paper on a daily basis, to help study stock trends.

The best advice is to start trading in a small number of units until one gets the hang of the stock market, understands its nuances and makes more profit than loss over a period of time. A diversified portfolio will balanced one's risk, with a mix of blue chip, mid cap and penny stocks from various commodities and sectors. This way, a loss in one area will be balanced out with the profit in another.

There are many books and online guides that act as Your Personal Financial Mentor, and even make the potential investor familiar with the stock market terminology. Signing up with various online forums helps to get stock investing ideas from other investors. Their tips should not be blindly followed, but merely used as leads to be further investigated. A search for free stock market trading tools on the internet will provide a long list. These tools are used in trending and prediction analysis. Some advanced features would only be available with the priced versions of the software tools, but the free versions are sufficient for a trading novice.

A stock market trader must keep up with local and global news, especially concerning the companies behind their chosen stocks you are interested in. A potential merger or upcoming announcement of quarterly results is likely to cause a big jump in the stock market, either positive or negative.

Stock brokers offer advice for a commission, calculated as a fixed percentage of the amount involved in each transaction, irrespective of the result being a profit or loss to the investor. Though these may eat into your profit margin in the long run, they are useful to a beginner who is trying to get a firm grip in the stock market.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.