Understanding How to Invest in Stocks

How to invest in stocks is what keeps a lot of would-be investor off the stock market.
To know how to invest in stocks requires a lot knowledge and skills that many people do not have.
And yet there is a lot of money to be made when it comes to investing in the stock market.
But, it also comes with high risks as well. How to invest in stocks and
making money requires proper knowledge and analysis of stock trends.

Many investors would have never gained their financial freedom if it were not for the stock market itself.
While there are many great resources to acquire this knowledge,
there are also many that are going to deny you access to this information.
If you are going to be successful in the stock market, it is important to be aware of the myths about the stock market.

The first misconception is that the stock market crashes every year like clockwork.
While the stock market has experienced many crashes in its history, it is a misconception that the stock market is volatile.
When it comes to the stock market, there are cycles that happen over the years.
These are the fundamental analysis cycles. When you understand these cycles,
you can increase your odds of being successful in the stock market.

Table of Contents

The cycles to know how to invest in stocks

The stock market goes through these basic cycles. It goes through 3 basic phases.

1. Fundamental Analysis

This phase happens every time there is significant news that affects the financial situation of a company.
In this phase, fundamental analysis is done to find out how the company is performing financially.

* Assessment of the company’s cash flow

* Assessment of the company’s earnings

* Assessment of the company’s debt (whether it is consolidated, portfolio, or government backed)

2. Technical Analysis

This phase happens when there is significant news that affects the price of the stock.
In this phase, technical analysis is done to find out how the market is reacting to news.

* Look for an immediate reaction

* Look for confirmation of the trend

* Determine when a support or resistance point will be

3. Release of news

In this phase, release of news happens. This phase ends when all the news has
been released and the news is starting to become confirmed.
When the news has been released, the confirmation ends the fundamental analysis phase.
This phase ends when the technical analysis phase ends.
When the technical analysis phase ends, the stock market knows it’s ready to go up.

The stock market doesn’t go down every year like clockwork.
There are many reasons why the stock market may have a downturn.

1.- the bad news. The company will do bad so the price of the stock falls.
2.- the bad news is always over exaggerated.
3.- when the company has so much cash on hand that the news is completely exaggerated.
4.- when the market is really low so we have a lot of stock available on the market.
Also the supply on the market is the highest so the price is highest.
If the supply on the market were to be less than the demand then the price should be equal to the demand.
5.- there is a bad moat. This means that there is no fundamental reason that makes the stock go up.
Thus the price will decline.

Now that you know how the stock market works, you can learn more on how to trade stock.

Choosing a stock broker

First you need to choose a trading broker.

One of the best ways to learn how to trade is to study and learn from the best traders.
The first step is to choose a broker who will teach you everything you need to learn how to trade.

Advantages of choosing a broker.

1. The broker is going to take care of all your needs.
He will get you his fee every time you buy or sell a stock.
He will not advise you nor take the decision for you. He will only take care of your account.

2. Your broker will keep a constant eye on your account.
He will never let you invest your account in something that he feels is not prudent.
He will let you know what is a good investment and what is not. He will help you choose the right company or stock to buy.

3. Your broker will never take advantage of you.
Your account will be properly protected. They will never do anything that is not in your best interest.

If you go for this broker, you must make sure that he has a good reputation and a good winning record.
Remember, brokers that have a losing record are not good to choose.

Stock trading basics.

* How to Invest in Stocks How to invest in stocks?
You can choose to buy a stock at a lower price and sell it at a higher price.
Or you can choose to hold your stock long term. Your stock investment will depend on
how long you intend to hold it and for how long. For short term, you can go for an Automatic Investment Plan.

There are two ways you can easily invest in stock:

* By investing in Fund

* By using Automatic Investment Plan

If you want to put your money into stock, you can use fund or Automatic Investment Plan.
Fund is the traditional way to invest in stock. Fund allows you to invest money into your desired stock.
It is easy to use and understand. Fund takes most of the risk away from you.
Simply tell your fund company your funds amount and they will place your money into the stock you have asked for.
Fund can be used for short term or long term.

Automated Investment Plan is different.
If you choose to use the program, your money will be placed into a long term stock.
When you want to sell, you can simply ask your fund company to sell your funds.
And they will do it for you. Programs help you to sell your stock whenever you like.
Automated Investment Plan takes more risk and difficulty away from you. They ask you to do most of the work themselves.

Since the stock market cycle is almost all news-driven, a savvy investor always stays abreast all news affecting the market.
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Wandji Nguemako

Wandji Nguemako is a writer, editor, entrepreneur and public speaker. Having been an entrepreneur, educator, and fashion designer, Wandji now focuses his work on personal development, wellness, and spiritual growth. He is the founder of Self Renewal Magazine, a digital publication that promotes self-love, kindness, and wellbeing, where he chronicles his journey of self-discovery and shares actionable strategies to help others live their best lives.
"You must nurture your own inner being to accept yourself as you are. If you don't accept yourself, you will never be at peace with yourself."