If you are thinking about entering the stock market and the world of stocks, here are 5 steps you must do:
1. Having an account with a brokerage firm: Having an active account with a financial brokerage company is as simple as opening a bank account with any bank in Egypt. Almost the same requirements that the bank needs are the same as those required in the process of opening an account with a financial brokerage company, and this step opens the door to the stock market and dealing in it.
2. Conducting stock research: Conducting research for the stocks that you want to own is very important before thinking about buying a particular stock because the search will give you a special view of this stock, its value, its importance, and how satisfied you are with the purchase you want to enter into, and therefore this will affect your feelings about your future decisions on the stock, whether to keep or sell.
Try to make your goal simple and do not go too far with a lot of data and information that may distract you. You can start with companies that you know as a consumer and love to own shares in. As well-known billionaire Warren Buffett says, “Buy in a company that you want to own stock in, and don’t buy just because you want the stock to go up and make gains. Your goal in research is to find the companies you want to partner with.”
After you define your goal, you can view the company’s financial data, which is available in a number of sources, as well as track the company’s daily news and perform financial and technical analysis to know all the details about the stock, the company, and the expected profit or loss.
3. Determining the number of shares and diversifying the portfolio: Coming up after knowing which companies you want is to determine the number of shares and diversify your investment portfolio. If you are new to the stock market, you can try the market at first by activating the demo market system and thus experience the feeling of buying and selling virtually. This is similar to buying and selling in the real market and thus training yourself not to fall under any pressure of any kind at the time of buying or selling because this will benefit you in mastering your market decisions.
After navigating the world of the virtual market and feeling that you are ready to start investing in the real market, you can start buying low-value stocks, so that if they don’t increase you will not lose in most cases, because they are already low, and it will be an exercise for you on the market and a quiet start in your investment career.
4. Stop Loss – Knowing when you can stop the loss is important, as many do not know when they can stop the loss. The basis of the stop loss is the extent to which you can bear more losses. The extent to which you will accept more losses depends on your financial ability, your correct reading of the stock, and the validity of the analysis you have conducted on it.
Not everything you see that glitters is gold, many times when the wind comes against what you want and your expectations of profits turn into losses, that’s where the importance of the stop-loss order lies, which is when you set a certain limit and when the stock drops and touches this barrier, the stock sells at this point, therefore it stops your losses.
5. Don’t put all your eggs in one basket – It is imperative that you do not put all your investments in one place. The stock market is a volatile market, and decisions at the time of volatility are difficult and you should not focus on decision-making in those times because they are not the most appropriate times. Try to calm down, read the indicators correctly, and know your investment goal before going after the ups and downs.
Make your investment in stocks the beginning of a long investment journey that depends on other forms of investment that support you whenever one type of them fails you. Do not limit your freedom to a particular type of stock, and also make sure that you are strong and resistant to fluctuations and make decisions based on a clear vision.
In the end, investing in stocks is one of the doors to financial freedom, and owning strong stocks is one of the most important ways to achieve profits. Whoever fears climbing mountains will live forever among the pits.
- This is not investment advice, & you should do your own research before making an investment decision
