Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

How To Get Into The Stock Market

Ah, the stock market, the biggest casino in the world, as some people would call it. Those people are unlikely to have any real experience trading on the stock market, but rather see the value of it as a place where the rich risk their cash. This isn't true, of course, so if you're interested in seeing what it's like for yourself, it's best to get at least a basic understand of what you'll need to do to put yourself in the best position to start trading.

When it comes to stocks, ignore the stock prices you see on the tickers of the news stations. That price is not something you want to solely base your decision to buy your first stocks on. Here's a few ways you can understand the real value of a stock:

Earnings/share: This number is calculated by taking the net profits of the company, subtracting the dividends being paid to investors and shareholders, which is then divided among the outstanding shares left to be paid out.

Dividends don't get paid until a company is profitable enough to be able to pay their investors and shareholders without hurting its growth. Sometimes, when a successful company exhibits more potential for growth than what it left over after dividends, shareholders will reinvest in the company, driving up the stock price further.

Market cap: a quick way to get a read on a stock is by looking at the amount of market capital it has, or the share price x outstanding shares. This is a more honest look at what the true value of a stock is.

This is similar to the price-to-earnings metric, which takes the current price and divides it by the earnings per share. This is the exact dollar amount that investors look at when determining the real value of a company on the fly.

So, as you can see, stock prices advertised to the public leave a lot off the table, which is how many people can buy up stocks from big companies, yet end up with worthless investments.

Deciding on a Company to Invest In

Okay, so now you're at least a little bit more prepared to handle the flurry of financial words that are flying at you. That still doesn't help you decide on a company to invest in, though. What should you even be looking for?

When you're picking which stocks to put resources into, most procedures can be categorized as one of two classifications (and a perfect financial specialist will have both in their portfolio): development stocks and profit stocks.

The fundamental thought behind a development stock is that you need to get it when it's not worth much, and after that offer it when it's justified regardless of a great deal (purchase low, but offer high). Odds are these are the sorts of stocks you've heard individuals examine when looking at purchasing or offering a stock since they're the most intriguing and see the most change on a day by day, quarterly, or yearly premise.

A more secure approach to profit on stocks is to put resources into an organization that pays out its profits, obviously. A few organizations have achieved their level as far as development. You may see some expansion after some time, yet the sought after traits of these stocks are their security and profits. You can presumably assume that Walmart wouldn't leave business at any point in the near future. Since the organization profits to reinvest and still have some remaining, it pays to invest. As such, the organization pays you cash for being a shareholder with them .

Diversify and Grow

Try not to put your money exclusively into one stock. This is a beginner misstep that can bring about a considerable measure of issues. An experienced player will have an enhanced portfolio that covers short-term and long-term investments. This implies you'll have cash in an assortment of stocks with various objectives. There's no compelling reason to pick amongst developing and established profit stocks. Purchase both.

Luckily, nowadays it's no problem getting your portfolio set up. There are various locales you can agree to that will permit you to put resources into individual stocks or get tied up with a common reserve or ETF.

All the big online stock trading website permit you to move cash into their system, buy singular stocks, or put resources into common assets or ETFs. Picking a decent shared store or ETF is outside the extent of this article, yet all the major websites will explain it once you have begun your interview process.

Once you've picked the website to utilize, make sure to set up some programmed withdrawals from your bank account to send cash from every paycheck to your account. You don't need to quickly profit, however by keeping that cash out of your personal bank, you can make a good habit of budgeting.

There are three main types of trading, swing trading, day trading, and long term position holders, read an indepth article about each and decide what kind of trader you want to be.

 

We will try our best to keep this blog full of knowledge nugets supported by our research from swingalpha.com