Getting started investing in the stock market can be daunting for beginners. The idea of putting your hard-earned money on the line with no guarantee you’ll come out on the other end of the trade completely whole is stressful.
But the truth is, any stock investing strategies for beginners can be simplified to the point where you can follow a consistent blueprint for repeated success. You don’t have to play the guessing game when investing.
We’ve put together 10 of the best investing tips for beginners who are interested in making their first trade below. Here’s an overview of our top tips for investing in stocks for beginners:
- Set Clear Financial Goals
- Take the Time to Learn the Basics
- Choose the Right Brokerage
- Practice With Paper Trading
- Start Small and Scale Gradually
- Always Stick to Your Trading Plan
- Use Stop-Loss and Take-Profit Orders
- Understand Taxes and Fees
- Eliminate Emotion From Your Decision Making
- Invest in Tools That Do the Hard Work For You
That last one is perhaps the most powerful. Why work harder when you could work smarter? Our stock analysis software here at VectorVest has outperformed the S&P 500 index by 10x over the past 20 years and counting. See it in action with a free stock analysis today!
Best Investing Tips for Beginners Getting Started With Stock Trading
Of all the tips on investing for beginners we’ll share below, the most powerful is to invest in yourself and leverage tried-and-true tools such as the VectorVest stock advisory. But, here are all 10 of the best tips for investing in stocks for beginners looking to hit the ground running.
Set Clear Financial Goals
Not everyone invests for the same purposes.
Maybe you’re trying to start investing for early retirement.
Or, maybe you’re already in retirement and want to continue living off dividends.
Maybe you need to supplement an existing source of income, or perhaps you want to make a living swing trading.
The point is, you need to start with clear financial goals as this will guide your next steps. Ask yourself what you want to achieve and in what timeframe. Once you have that foundation, it’s much easier to develop a trading plan that fits your risk tolerance and objectives.
For example if your goal is to figure out where to put retirement money after retirement so you can live comfortably a few decades down the road, you’ll want to focus on finding the best stocks for Roth IRA or safe dividend stocks.
On the other hand, those interested in generating income for the present day will likely choose either swing trading vs day trading, and will be focused on uncovering high volatility stocks.
Take the Time to Learn the Basics
We know you’re eager to make that first profitable trade, but one of the best investing tips for beginners is to embrace the learning curve and take your time.
Trust us, it’s worth being patient and gaining an understanding of how the stock market works and what drives stock prices. Otherwise, you’re going to end up spinning your tires and losing money.
There’s a lot to consider here. You need to learn fundamental analysis and learn technical analysis of stocks, or better yet, how to combine fundamental and technical analysis. You should also understand the concept of stock market sentiment and the role it plays.
From how to build a stock portfolio to the best stock indicators, there are so many different things you need to master before you can open a brokerage account.
While free stock analysis websites are a good starting point, you may find it worthwhile to invest in paid courses. This will speed up the learning curve tremendously.
We have a great database of digital classes and other educational resources here at VectorVest. You can learn options trading or learn swing trading, or even the best way to invest money for retirement. We’re here to empower your journey!
Choose the Right Brokerage
The platform on which you’ll actually trade is known as a brokerage. There are many options at your disposal, and while they all more or less serve the same purpose, not all brokerages are created equal. Here are some things to consider:
- Low fees: High trading fees eat into your profits, especially if you make frequent trades. Look for a brokerage that offers commission-free trades or low transaction costs.
- Research Tools: A good broker will provide research reports, stock screeners, and charting tools to help you analyze your trades.
- User Interface: Whether it’s an app or desktop platform, a clean and intuitive interface will make your trading process smoother.
You can’t go wrong with Interactive Brokers, TradeStation, or InteractiveBrokers as they all integrate seamlessly with our investment app for beginner traders. This is one of the best investing tips for beginners we have to offer.
Spend time comparing different brokers, and don’t be afraid to sign up for a demo account to test the waters before committing. We have more tips on finding the best broker for swing trading specifically if you’re interested.
Practice With Paper Trading
Wait, what is paper trading? This is a risk-free way to test strategies, get familiar with how a given platform works, and learn from your mistakes without financial consequences. Essentially, you’re trading with virtual money in real-world conditions.
This will provide you with experience and confidence while helping you avoid those growing pains early on which can quickly erode your portfolio.
But just because it’s fake money doesn’t mean you should treat it that way. Set goals, use stop-loss orders, and monitor your trades closely. The whole point of this technique is to prepare for the real deal.
Start Small and Scale Gradually
When you finally feel confident getting started with real money, we recommend you start trading with a small account – even if you have access to plenty of capital.
Sure, your profits won’t be quite as impressive – but your losses won’t be nearly as painful either, and that’s perhaps more important. Because even if you take your time to learn the basics and practice with paper trading, you will face losses early on.
The smaller your positions, the less impact any single trade will have on your portfolio. Whatever amount you have to work with – $1,000 or $100,000 – we don’t recommend any single trade being more than 2-5% of your total capital.
You can slowly increase the size of your positions and trades as you build confidence and understand how the market works.
Always Stick to Your Trading Plan
Whether you decide to implement swing trading strategies or day trading, you’ll need to define the parameters for each and every trade you make. That includes your position size, which we just touched on, but also your entry and exit points.
Coming up with a rules-based system that guides your trading decisions will ensure you’re prepared for market conditions, whether good or bad, and help you get out of your own way.
A clear plan should outline the exact prices or indicators that signal when you’ll buy, hold, or sell a stock. This removes subjectivity from your decisions. Similarly, define how much you’re willing to lose on any single trade before entering it.
Use Stop-Loss and Take-Profit Orders
There is no worse feeling than seeing a winning trade turn into a loser in seemingly the blink of an eye, watching unrealized profits disappear for good.
Besides, of course, watching a losing trade turn into an even bigger loser because you waited for things to turn around – but unfortunately, that never came to fruition. These scenarios illustrate the importance of using stop-loss and take-profit orders, key risk management tactics.
A stop-loss order automatically sells a stock once it reaches a certain price so you can limit your losses if a trade goes south. You can set it in accordance with your trading plan.
In contrast, a take-profit order prevents you from getting greedy. It automatically closes your profits after the stock reaches a target price. Each of these is important.
Don’t Overlook Taxes
One of the less exciting tips on investing for beginners is to think about taxes before tax day actually comes. Nobody likes talking taxes. It’s boring and downright frustrating, feeling as if you’re being robbed of your hard-earned money.
But, you can’t manage your portfolio from prison, so it’s something you need to prepare for. Most countries look at the profits of stock trading as capital gains. The specifics will vary depending on how long you hold the stock.
We have resources covering taxes on covered calls, tax on options trading, and swing trading taxes. Once you start earning serious returns on your trade it’s worth hiring a professional to navigate the taxation side of things and avoid paying more than you’re obligated.
Eliminate Emotion From Your Decision Making
One of the biggest mistakes beginners make is trading impulsively, letting their emotions guide their decision-making. This is a recipe for disasters. That’s why one of the best tips for investing in stocks for beginners is to eliminate emotion altogether.
Easier said than done, of course. How do you get out of your head and out of your own way? Here are a few investing tips for beginners:
- Recognize Emotional Triggers: Emotions are inevitable, but you need to be able to spot and control them. Recognize when you’re trading out of fear or greed, like chasing a stock on a hot streak or panic-selling during a dip.
- Use Data, Not Feelings: Every decision should be based on data and analysis, not gut feelings or market noise. When you rely on chart patterns or financial reports you can make rational choices even in volatile markets.
- Take Breaks When Overwhelmed: It’s easy to get caught up in fast-moving markets, but if you’re feeling anxious or overly excited, take a step back. Walk away, breathe, and only return to trading once you’ve calmed down and can think clearly.
The best piece of advice we have to offer on this aspect of investing, though, is to rely on tools that do the thinking for you based on sophisticated algorithms and data. You can trust the best stock analysis app to ensure your decisions are rooted in logic and not feelings.
Invest in Tools That Do the Hard Work For You
Speaking of tools, there’s no need to waste your time filtering through countless charts or searching near and far for your next investment opportunity. These days, you can work smarter by leveraging certain solutions, like an iPhone stock app or Android stock app.
There are also swing stock screener tools that can bring winning opportunities to your screen on autopilot. Or, if you’re into options trading for beginners, consider paying for the best options alerts.
This will not only help you remove emotion from your decision making but it will also save you a ton of time every single day. So before we wrap up our list of investing tips for beginners, set yourself up for success with the VectorVest stock picker.
Simplify Investing and Win More Trades With VectorVest!
VectorVest is a proprietary stock rating system designed to simplify your investment strategy by distilling complex technical indicators and fundamental data into clear, actionable insights.
You’re given everything you need to know to make calculated, emotionless investment decisions in 3 ratings. These are relative value (RV), relative safety (RS), and relative timing (RT). Each sits on a scale of 0.00-2.00 with 1.00 being the average for effortless interpretation.
Better yet, you’re offered a buy, sell, or hold recommendation for any given stock at any given time based on the overall VST rating for a stock.
Plus, you have access to a wealth of stock picks to support your strategy so you never have to look far for your next trade – whether you’re interested in uncovering the best stocks for covered calls, monthly dividend stocks to hold forever, aggressive growth stocks, undervalued stocks, the best blue chip dividend stocks, or anything in between.
Investing is hard enough as is. So, why not stack the deck in your favor with VectorVest’s suite of solutions? Take a closer look at how VectorVest can streamline your investing journey today.
Closing Thoughts on Tips for Investing in Stocks for Beginners
That does it for our list of investing tips for beginners. As overwhelming as this journey may seem, it can be streamlined by starting with clear goals, learning the basics, and sticking to a disciplined plan. Leverage tried-and-true tools along the way for the best chances of success.
We have swing trading tips specifically if that’s the stock investment strategy you’re interested in. You can also learn about fundamental vs technical analysis, are financial advisors worth it, best day of the week to buy stocks, exercising stock options, and more.
At this point, though, it’s time to put these tips for investing in stocks for beginners to the test. Take control of your investing future with VectorVest today, where data-driven decisions lead to better trades!
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