The U.S. equities markets are vast and feature a wide array of unique opportunities. Regardless of your expertise, there’s a sector, mutual fund, individual stock, or ETF well suited for your skillset. That’s one reason 55 percent of American adults participate in the NYSE, NASDAQ, or OTC equities market.
If you’re asking, “How do I get started trading stocks?” read on to learn how in four easy steps.
How Do I Get Started Trading Stocks?
If you’re a market newbie, this question can be daunting. But there’s no need to worry—follow the steps below, and you’ll be up and running in no time!
Step 1: Define Your Purpose
Millions of people trade stocks every day for countless reasons. To make the most out of your foray into the equities markets, it’s important to thoroughly address two questions:
- Why do I want to trade stocks? Everyone has a unique reason for being in the market. What’s yours? To build a career? Make money? Satisfy intellectual curiosity?
- What are my goals? Do you want to earn a seven-figure income or simply make some extra cash?
Every great journey begins with a clear-cut purpose. Before jumping into the market, it’s important to know why you want to trade and what your objectives are. By doing so, you’ll know what is needed for success.
Step 2: Take an Asset Inventory
Stock trading is a business. To conduct this business, you’ll need three things—time, money, and knowledge:
- Time: The amount of time you have will determine how involved your stock trading will be. One of the great things about the markets is that your trading day can look however you want. You can work a full-time job and still trade.
- Money: You will need risk capital to stock trade. It doesn’t take much to get started, and the amount you put in is up to you.
- Knowledge: Before entering the market, it’s important to at least understand the basics of stock trading. If you are completely in the dark, there are many educational materials available online.
To truly answer the “how do I get started trading stocks” question, you must know how much time, money, and knowledge you have. Why? Your assets will determine which types of strategies and brokers are best suited for your success.
For instance, if you have limited time to trade, lower-intensity swing trading strategies may be ideal. If you can trade full time and are well capitalized, day trading may be the way to go. Once you assess your purpose, resources, and strategy, you can choose the broker best equipped to service your needs.
Step 3: Choose a Broker
Steps 1 and 2 are vital to entering the market on the right foot. Now, we’ll address the actual nuts and bolts of stock trading.
To trade stocks, you will need a broker. Stockbrokers come in two basic types:
- Zero commission: Zero percent commission brokers offer traders low fees and a basic service suite.
- Full-service: Full-service brokers work one on one with the trader and have a higher cost structure.
No matter what type of broker you want to work with, it’s important that the firm is reputable, licensed, and in good legal standing. Taking care of this due diligence task is a critical step in the how do I get started trading stocks progression. Make sure your broker is on the up and up!
Step 4: Open a Trading Account
Compared to the first three steps, this step is a breeze. Unless you are dealing with a boutique brokerage service, you can open an account quickly online. Follow the steps below, and you can be trading within 48 hours:
- Visit the brokerage website.
- Select “open account.”
- Fill out the online application.
- Wait for verification.
- Fund the account.
- Begin trading.
Opening an account is the easiest part to answer of the how do I get started trading stocks question. It only takes a few minutes and may be done completely online.
