How to Invest in Stocks
Published: 18 November 2020 by Andrew
Is investing in Stocks still a good idea? In fact, equities are among the financial stocks most appreciated by investors and are still a very profitable investment for those who want to Invest in Stocks.
However, investing in stocks is not always a good idea. And we are not talking about the stock exchange, which obviously goes up and down, but about the necessary knowledge.
There are investors who don’t know the techniques for investing in stocks and are losing money. Others, even beginners, quickly manage to achieve great results.
What is the difference? Quite often the lack of training. In this article we explain in detail how to invest in stocks without errors.
Another critical element is the choice of the platform for investing in stocks. Today there are many reliable and safe platforms to work with and we will present them in this article.
To give an example, let’s immediately mention eToro. Why do we start right from eToro? Not only because it is very simple even for those who start from scratch but because it allows you to copy, in a completely automatic way, what the best investors in the world do.
Thanks to eToro it is therefore possible to obtain, immediately, the same results as the best investors in the world and you can also learn to invest (if you want) by observing directly what they do. It is no coincidence that eToro is the preferred choice of many beginners.You can sign up on eToro by clicking here
Invest in Stocks starting from scratch
Those who start from scratch maybe think that investing in stocks means buying stocks when the price is low and then reselling them when the price increases. This is certainly a method of investing in stocks but it only works when the markets go up.
Anyone who only buys stocks, risks not making much money (or losing money) because the stock market goes up but also goes down. Of course, if the investment time horizon is several years and you have very high capital, then buying shares and keeping them (perhaps collecting dividends) can be a good idea.
Those who decide to operate in this way must be very cold-blooded, given that there will be years in which the value of the investment will drop significantly (the years in which the stock market falls).
For those who have only a small amount of capital available (for example, 250 euros) this approach is absolutely not applicable.
In fact, in this guide we mainly deal with small investments in stocks that can generate profits (possibly high) in the short term.
The secret of investing in winning stocks lies in Short Selling. It is a purely speculative operation that allows you to make a profit when the price of a share drops.
From a conceptual point of view, it is equivalent to selling an asset, in this case a stock, that has never been bought.
For the novice investor, it is sufficient to know that it is an operation that the best investment platforms make available and that allows you to make money from a stock when its price drops.
At this point it is clear what successful investors do: they buy stocks when the market goes up, they sell them short when it goes down. They can always make money, whatever the market does. Profits can then be further multiplied by applying leverage.
Not all investment platforms make these two basic tools available.
Read more: Short Selling
Best trading Platforms to Invest in Stocks
We selected the best investment platforms, safe and reliable, also suitable for beginners. These platforms do not charge any commission (zero costs) and can be used to invest in stocks by buying or selling short.
Some of these platforms offer free educational tools, particularly valuable for those approaching the equity markets for the first time. The advantage of all these platforms is that they offer a CFD (contract for difference) service.
Min. Deposit: 50€
Min. Deposit: 100€
Min. Deposit: 50€
Min. Deposit: 250€
Min. Deposit: 100€
Min. Deposit: 250€
eToro is truly the preferred choice of many of those who start investing in stocks. Among the fundamental features of this platform is the ability to operate without paying commissions, simply and securely.
eToro is famous above all because it is the only platform that allows you to automatically copy what the best investors in the world do.
Thanks to the patented Copytrading software it is possible to easily discover the investors who in the recent past have obtained the best results, that is, the maximum profit with the least risk (certified data).
These investors are called Popular Investors and can be selected for copying. The automatic software will take care of replicating, instant by instant, all their operations.
Those who start investing in stocks can thus obtain the same results from the very first day as the best investors in the world and, if they wish, they have the opportunity to learn the art of investing well by observing what they are doing live.You can sign up for free on eToro by clicking here
ForexTB is the other great alternative for those who want to start investing in stocks without errors and without particular problems.
The platform is characterized by its great simplicity: it is truly intuitive, even for those who start from scratch. Those who sign up are then followed on the phone by a real investment expert who provides directions and advices.
One of the biggest gifts that ForexTB gives to beginner traders is its free course. This course has been an extraordinary success, with hundreds of thousands of downloads in Europe.
The reason for this success? First of all it is free, while other less good courses have a high cost (we are talking about thousands of euros). It is also a simple course to read, even for a beginner.
Finally, it is a practice-oriented course. Explain how to earn by investing in stocks or other financial stocks, without wasting time with theory. You can download the course for free by clicking here.
The benefits are not over yet: you can even use a demo platform to simulate investing in shares. In practice, we buy or sell shares using virtual money. In this way you can quickly improve your experience, without any kind of risk.You can sign up for free on ForexTB by clicking here
Iq Option is a platform particularly appreciated by those who want to Invest in Stocks or on other financial securities and do not have a large capital available (or who in any case want to invest very little).
The platform, in fact, allows you to start with a capital of just 10 euros. The other investment platforms usually have a minimum investment of 250 euros (which however is not high).
Iq Option offers a completely free service (0 costs and zero commissions). Subscribers can access an educational area, that is rich in video courses that explain investment techniques starting from the basics up to the most complex strategies.
It is possible to access the demo for free, unlimited and without costs for all members.You can sign up for free on Iq Option by clicking here
Investing in Stocks: is it convenient?
At this point we are able to answer the question with which we started this guide: is investing in stocks worthwhile?
The answer is that it depends. First of all, it is absolutely necessary to use one of the best platforms to invest (we have presented some of them above).
In addition, it is important to know that you can’t always buy, there are times when you also have to sell short to earn from stock market declines.
In practice, investing in stocks pays off whenever the stock market moves, all you need to do is accurate stock market predictions.
It is not at all difficult, with a minimum of experience you can use technical analysis and fundamental analysis tools. Anyone who starts from scratch, can always be explained on the phone by ForexTB experts how to do it or can copy the best ones with eToro.
With these two conditions (better platforms and knowledge of the possibility of short selling), investing in stocks pays off.
Invest in Stocks: what CFDs are and why they are convenient
When we presented the ranking of the best platforms you can choose if you want to invest in stocks, we explained that these are trading platforms for CFDs (contracts for difference).
A CFD is a financial contract whose value depends on another security, called the underlying.
In practice, the CFD on Amazon shares has the same value as Amazon shares. The fact of using a CFD allows several advantages:
- Simple and intuitive tool
- No commissions to pay
- You can sell short so you make money even when the value of the security drops
Invest in safe stocks
Beginners have an obsession with investing in safe stocks. In fact, the concept of safe stocks just doesn’t exist.
First of all, no shares can always go up. All stocks have phases in which they go up and phases in which they go down. These phases can also be generalized, that is, there are times when all the markets go down and others when they go up.
Furthermore, the concept of safe stock is useless even for the purpose of earning: we have already clearly seen how one can invest in stocks and make money both when prices go up and when they go down.
To these observations we add our advice: avoid like the plague those who offer advice on safe stocks. Usually they don’t even know what they are talking about and following them can result in serious losses.
Invest in Amazon Shares
To better understand this concept, let’s consider Amazon shares. Beginners may think that Amazon shares are set to go up forever and therefore investing in Amazon shares is a winning choice.
The reality is that Amazon shares have gone up a lot and have made those who invested wealthy, that’s true. But they cannot go up forever. Jeff Bezos, the charismatic founder of the company, admitted in a closed door meeting that Amazon could be in crisis in the next 30 years.
Is this a problem for those who invest in stocks? Absolutely no. If for years they have gained from rising share prices, when Amazon shares start to fall, they will make money from the drop with short selling.
Below, the chart with Amazon’s real-time quotes:
Invest in Stocks: trading Forums
At this point it is important to talk about the trading forums: unfortunately many of those who want to invest in stocks are looking for information on the forums with truly negative results.
Forums are the worst place to look for information on how to invest on the stock exchange.
The main problem with the forums is that nobody checks the identity of the subscriber. In the end a fake email is enough to create an account.
The result? On the stock exchange forums there are many scammers who try to sell courses or systems to make easy money on the stock exchange (systems that obviously only make you lose money).
Or there are (fake) experts who spread ideas about safe stocks to buy when they never invested in their lives or, even worse, when they tried to invest they lost everything…
In short, the forums are certainly not suitable for those who want to start investing in stocks but comparing them with other investors (experts, if possible) is a great idea.
How you do it? Once again, the solution is offered by eToro. It is not only a platform for investing but it is also the largest investor social network in the world. Thanks to eToro it is therefore possible to read the ideas of the largest investors in the world and interact with them.
The nice thing is that on eToro there are no scammers (they would be reported immediately) and above all it is impossible to lie: there are therefore no dangerous braggart who claim to earn a lot on the stock exchange when in reality they are incapable.
The level of profits obtained in the past is associated with the profile of each eToro user (and they are certified data). In this way it is possible to know if you are reading the opinion of an amateur or a great expert. And this makes the difference.You can sign up for free on eToro by clicking here
Invest in Stocks with the Bank
Until 10 years ago, the only possible way to invest in stocks was to go to the bank and speak to an official. The wealthiest customers could afford the luxury of giving orders over the phone (but you had to be really rich and with an important portfolio to have this possibility).
The bank was extremely slow in carrying out the operations and above all very expensive. Still today it is possible to buy Stocks in the Bank through the online platforms that all European banks have created in recent years.
If the technical problems have been solved (at least in part), European banks have always been characterized by poor convenience and high costs. For this reason, the most savvy investors prefer to use investment platforms not linked to European banks.
All the platforms that we have reviewed in this article are absolutely free and do not apply any type of commission.
Books to Invest in Stocks
Studying before you start investing in stocks is a great idea. But what are the best books for learning to invest without mistakes?
The starting point for anyone who wants to learn is the ForexTB course. Among other things, it is a completely free course, unlike other courses that have a prohibitive cost.
Why do we suggest to start from this course? Because it is very practice oriented and because all the members of ForexTB are assisted on the phone by real stock market experts. In practice, you can study and simultaneously practice with the assistance of an expert.Click here to download the free ForexTB course
For those who still want to deepen some theory, we list below some of the most interesting books on the stock exchange.
“The Intelligent Investor” is a classic book that has existed since 1949. Revised and last updated in 2009, it is considered a sort of bible for the novice investor who seeks traditional wisdom on how the market works and how to exploit it to the best.
The book is largely focused on the concept of value investment and the average cost of the dollar, strategies that Warren Buffett has used with great success. It is written with the long-term investor in mind who prioritizes building wealth gradually, rather than seeking short-term wins through frequent operations.
“The Intelligent Investor” is not necessarily the sexiest or most flashy book around investing for beginners. But it more than compensates for this with an abundance of common sense advice.
The Little Book that Beats the Market
Not sure how to choose the stocks for your portfolio or what makes one stock better than another? Do you have questions about why stocks are important for investment? If you said yes, “The Little Book that Beats the Market” is a must.
First published in 2005 and updated in 2010, this book delves into the basics of how the stock market works and the essential principles for successfully investing in individual stocks. Greenblatt also explains his simple but proven theory of investing in the stock market, which focuses on buying above-average companies at below-average prices.
The book is written with the “beginner’s mind” and was designed to help investors build the foundations for choosing stocks that can carry them forward in their investment career. It is easy to read and understand, which makes it easy to use for the new investor who wants to avoid complicated investment jargon.
Bogle on Mutual Funds
If you are not yet ready to dive into the collection of Individual Securities, Mutual Funds may be the solution. Mutual Funds are collections of Stocks, Bonds and other Investments in a convenient package.
In this book, written by the founder of Vanguard and investment legend John C. Bogle, you will learn how to develop an effective approach to investing in mutual funds.
It is one of the most complete books on mutual funds for new investors, which covers the four basic types of funds: ordinary stocks, bonds, money market and balanced. Bogle offers guidance on what it means to adopt a passive investment strategy and how to choose mutual funds based on performance and cost efficiency.
If you are looking to know more about investing in indexes in a specific way, then “Bogle on Mutual Funds” is a classic reading to be included in your list.
Read also: Stock Exchange Hours
Invest in Stocks: Coronavirus
During 2020, Coronavirus has literally upset our world by changing, probably forever, our habits and our way of life.
Finance has also been upset by the arrival of the Coronavirus: there are stocks that worked and others that have been severely damaged.
We talk about this issue not because we want to indicate which stocks to buy, but to give an example of some unpredictable situations that can occur when deciding to invest in stocks (attention: unpredictable does not mean negative, because many investors have earned it).
What stocks have been rewarded by the Coronavirus? Obviously the titles of pharmaceutical companies, especially those engaged in the vaccine race or that produce more or less effective drugs against Coronavirus.
Then there are the technology companies, Amazon in the lead. The fact that people have been forced to stay indoors has significantly increased the level of e-commerce.
Who lost with Coronavirus? Many traditional businesses have suffered a severe blow, starting with the airlines (many have gone bankrupt, will soon go bankrupt or will be nationalized).
Anyone who invests in stocks with CFDs, in any case, has obtained a benefit both with the stocks that have gone up and with those that have gone down…
Investing in stocks pays only provided that you use the services of the best investment platforms and only with adequate preparation.
In any case, we cannot even say that it is difficult. First, you can study excellent courses like this for free. Secondly, anyone who starts from scratch and doesn’t know where to start can always automatically copy the best investors with eToro.
Firstly by choosing a professional platform, secondly by operating with free CFD contracts and finally by studying the reference stock market well.
For the variety of Assets available and for market conditions, eToro and ForexTB are a step above the competition.
Equity investment has always been one of the most used by investors around the world. Its historical performances are clearly increasing, therefore it will be essential to choose the right Timing for our investment.
Much depends on the degree of risk of the investor. To date, bonds make very little, while with a slightly higher level of risk, the equity sector offers greater returns in terms of returns.