How many times have you heard the expression buy low, sell high?
This applies to trading stocks as well as every other kind of investment product that exists in the world today. To increase your returns, you need to invest in stocks while they are low and sell them when they’ve gone up - but how exactly do you do this? That’s what this guide will help you figure out!
What is trading?
The main differences between investments and trading Investing is a long-term strategy of acquiring an asset, in the hope that it will grow in value over time. This can be stock or bonds, for example. Meanwhile, trading is more of a short-term strategy - you buy something for a certain price and then sell it again at another price, hoping that the second price is higher than the first.
This type of investment takes place on the Tadawul platform, which caters specifically to people who want to trade on financial markets. You can buy shares (or stocks) here, among other things. And what are these shares? These are pieces of ownership in companies (for example, Apple) where your holdings allow you to vote on how they are run. To trade stocks online, all you need is an account with Al Rajhi Securities as well as a national ID card number and mobile phone number.
Set your goals right
This blog post aims to provide insight into the Tadawul platform and how it connects the global financial markets. We hope this blog post will help you make informed decisions when trading stocks or other financial instruments. One of the most important aspects of investing in the stock market is staying updated on market news, forecasts, projections, etc., so stay tuned for future posts on our blog To effectively trade stocks as a beginner, there are a few key facts you’ll need to know:
Learn how to save money
One of the most important things you can do is save money. Here are a few tips on how to start saving: Keep your money in a high-interest savings account -Pay off your credit card every month -Invest with a financial planner -Set up automatic transfers from your checking account into your savings account or retirement plan.
Diversify your portfolio for trading
Diversifying your portfolio is the key to success. There are many strategies for diversification, but one of the most common is called dividend strategy. Dividend strategy means investing in a diversified portfolio of stocks with high dividend yields that are expected not only to grow dividends over time but also to outperform other stocks.
The idea is that in any given year some stocks will do well while others won't. That way you don't have all your eggs in one basket and you can limit losses if there's a downturn. For example, if you want to invest $1,000 into stocks and want it to last 10 years, diversify by putting $200 each into 20 different companies (known as round-robin strategy).
Get some knowledge first to understand trading
The first step in understanding trading is understanding finance. There are two main ways that businesses make money: by selling goods or services, or by buying and selling financial assets, also known as trading.
Let's take a look at how this works with stocks. Say you buy 100 shares in Company A for $100 per share. That means the total cost for your purchase is $10,000. Now say Company A goes bankrupt and so you want to sell your shares on the stock market. If there were another investor who wanted to buy your shares then they would be worth only $50 per share instead of $100 per share because they no longer have value in the company that they used to belong to.
Make use of social media platforms
It can be daunting for beginners to get started with trading stocks and other financial instruments, but the good news is that there are plenty of resources available online that can help. A few of the best sources include finance blogs like Investopedia, which has a ton of information on how to trade stocks as well as investing in general. They also have an active forum where you can learn more about what other traders are saying and share your own thoughts.
If you want to follow professional investors, then Seeking Alpha is another great resource. These people offer stock tips and explain why they think certain companies will do well in the future. There's a lot to explore when it comes to making trades, so if you're looking for even more advice or just want some inspiration before starting out with trading stocks, then make sure you check these two sites out!
Take advantage of Telegram groups
There are many groups where people share their thoughts about the market and investment opportunities. I’ve found that participating in these groups can be a great way to learn from other investors and develop your own trading strategy.
Many of the members have been around for years, which has helped them build up a reputation for being credible sources of information. However, some people will just say anything for attention or money, so be careful not to get too sucked into any specific group's opinion.
Educate yourself
Trading stocks is a risky and exciting process that involves buying and selling stock, which can either make you money or lose it. It’s a great way for investors to diversify their portfolios, as long as they are aware of the risks involved. One popular form of trading is called day trading, where an investor buys and sells shares over a single trading day.
A trader may buy 200 shares in a company at 10:00 am and sell them at noon; he then may buy 100 more shares at 2:00 pm, followed by 50 more at 4:00 pm. After all these transactions, the trader has invested $1,000 but owns 500 shares worth $2,000 in total.
Don't leave your money idle
Don’t let your funds stay idle. It is important to keep your money in constant motion so that you can maximize the time that it is working for you.
When your money is idle, it does not have the chance to grow and provide you with a return. On the other hand, if you invest your money by trading stocks, then you can make some of that money work for you. Investing this way will help increase your earnings substantially over time as well as reduce how much taxes need to be paid on your profits.
The best part about investing this way is that anyone can do it; all you need is an account with a broker or financial institution where all trades take place.
How much money do you need to trade?
You need money to trade stocks. In other words, you need the funds to buy a stock and pay commission costs. The good news is that there are many ways that you can open up a trading account with as little as $1.00, so it’s fairly easy for anyone to get started. That said, you should know that brokerages typically charge transaction fees on every single transaction made - which means these charges will accumulate quickly if you're not careful.
For example, buying one share of Google Inc (GOOGL) at its current price of $787.10 will cost an additional 69 cents or 7% in commission fees (you'll also be charged this amount on the sale). While this might not seem like a lot right now, what happens when your holdings have grown?
What are the risks in trading?
The risk of trading stocks is that you might lose money. The higher the risk, the higher the return. If you're not careful, you could end up with a huge loss, so it's important to do your research and make sure that your stocks are worth the investment.
It may be tempting to just pick random stocks for your portfolio, but if you don't know what you're doing, then this isn't for you. There are plenty of free resources available online that can teach someone everything they need to know about trading stocks.
A few popular sites are Investopedia and Zacks Investment Research.
Investopedia has articles on how to trade stocks, while Zacks has information on individual stocks that traders should watch out for.