Before you jump into investing, take time to evaluate your financial priorities and educate yourself about the ins and outs of stock trading. Learning the hard way can cost you a significant amount of money and heartache. In addition to doing your own research, try to talk to someone who has experience in the market. Allow plenty of time to research the stock market and learn terminology in order to make informed decisions about your investments.
1. Educate yourself about market terms. Stock market terminology may seem intimidating at first, but once you understand the basic terms, like earnings per share, market value, and other common phrases, it's actually quite simple. The Nasdaq provides a helpful online glossary of more than 8,000 basic terms you might encounter while analyzing the stock market.
2. Utilize technical analysis, which looks at the movements of supply and demand in the market as a whole and attempts to isolate trends and general direction. Although some technical analysis calculations are highly complicated and best left to the experts, tools such as basic stock performance trend charts are beneficial and accessible.
3. Research the specific stocks that interest you. Once you know your investment goals and have studied the general direction of the market, study sectors that appeal to you. The major stock market sectors are basic materials, conglomerates, consumer goods, financial, healthcare, industrial goods, services, technology and utilities. Those sectors represent more than 30 sub-sectors, some of which are banking, electronics, IT services and transportation.
4. Subscribe to online or print trading publications. Some services provide up-to-the-minute details about changes in the market. Other websites, such as CNN Money, allow you to register for an account and save stocks that interest you most for daily monitoring.
5. Keep up with financial statements. The stocks you invest in should provide at least quarterly and annual statements, and you should study these documents to determine how your investments perform. You may access records of publicly traded companies at the U.S. Securities and Exchange Commission website.