How Do I Invest in the Stock Market for Beginners?

by Erin Schreiner, Demand Media Google

    Many novice investors stick their toes hesitantly into the stock market, testing the waters before taking the plunge. Buying your first stocks can seem almost as scary as that trip down the aisle you so recently took. However, if you play it smart, you really have very little to fear. Don't allow the intimidating nature of the stock market scare you away from playing in the pool at all. Ensure your dip is a comfortable one by exploring your options and making smart choices.

    Step 1

    Practice stock market investment. If you love the idea of the stock market but aren't ready to put any of your funds on the line, consider playing the virtual stock market. HowTheMarketWorks.com offers a free virtual stock market that you can use to get your feet wet before you invest.

    Step 2

    Determine how much you want to invest. Since you are new to the stock market game, you might not want to allocate too much money to your initial stock market investment. Consider starting with only as much money as you can afford to lose. That way, if your initial attempt proves less than successful, you won't be out too much.

    Step 3

    Decide whether you need an agent. There are advantages and disadvantages to relying on an agent when buying stocks. By electing to enter the stock market game with an agent, you can ensure that you have someone with experience to guide your initial purchases. Also, an agent will know how to do the leg work associated with stock buying, saving you time that you would otherwise have to dedicate to learning the trade. But if you select an agent, you must pay him a fee, cutting down on your profit. Some people just dabbling in the market opt instead to use an online stock-buying program to make trades. To determine which option is right for you, consider how comfortable you are controlling your own stock market destiny.

    Step 4

    Open an account. If you elect to go with a stock broker, open an account with a brokerage firm. To do this, you will be asked to agree to governing terms specific to the agency. If you venture into the wilds of stock trading alone, open an account with a private trading company, such as one of the many online stock trading platforms.

    Step 5

    Research companies in which you are considering buying stock. While the einey-meanie-miney-moe technique could prove profitable, the odds are against it. To increase your likelihood of stock buying success, gather information on companies in which you are considering buying shares. If you have an agent, she will likely be able to provide you with much of this information. If not, you may need to do a little digging yourself.

    Step 6

    Purchase your selected stocks at the right time. Timing is everything when it comes to playing the stock market. To make the most out of your investment efforts, you must buy when stocks are low. Monitor the stocks that you are considering carefully, but buy when they take a slump.

    Step 7

    Monitor your stocks regularly and make trades as necessary. Don't expect your investment to putter along on autopilot.

    About the Author

    Erin Schreiner is a freelance writer and teacher who holds a bachelor's degree from Bowling Green State University. She has been actively freelancing since 2008. Schreiner previously worked for a London-based freelance firm. Her work appears on eHow, Trails.com and RedEnvelope. She currently teaches writing to middle school students in Ohio and works on her writing craft regularly.