If you are a newbie in the field of trading stocks, there are things that you should understand in this particular market. Although it is true that you can make big in this market, it does not happen overnight. Time is needed to gain familiarity and patience is important to increase your chances of success.
Essentially, there are two groups of stocks. These are the preferred and common stocks. The returns in preferred stocks are fixed. The risk that a preferred shareholder takes is limited and the main interest is in dividends. However, most investors are investing in common stocks. The majority of investors are here even if they are taking more risks. A common stockholder has to vote in general meetings every year.
Under common stocks, there are 5 (five) types of stocks. You have to learn about these before investing:
These have high-growth potentials and grow faster than the economy. There is a lower risk level and more investors are attracted because these stocks have good growth in terms of earning in the long run.
These do not have large profit portion. If you choose this, you have to pay as high as 60 to 80 percent to investors as dividends. Investors are confident with this because they are almost resistant to changes.
Normally, these have the highest value, and most investors are industry leaders. They are usually huge institutions, which are present for years with strong fundamentals. Steady dividends are being paid and these are ideal for retirement portfolios.
These are under-priced with good growth potential. Value stocks are very attractive because they are sold lower than their real value. This is good for those investors who want to grow their portfolio.
The performances of these stocks are affected by the economy. When the economy is up or down, the recurring stocks react similarly. The economy dictates its performances, and it is best to invest when the economy is high.
On the other hand, the Forex (Foreign Exchange Market or currency market) is a decentralized market where currencies are traded. Its main role is to identify the relative values of different kinds of currencies. It engages trading currency pairs by several participating bodies from investment banks, insurance institutions and individuals.
If you take sufficient time to learn the ins and outs of this market before joining, you can have a lifetime journey with it. A well-working system is of high importance to be a successful Forex trader. Avoid using a system just because it is recommended by someone you know. It might not work with you.
As a Forex newbie you need practice and acquire skills to learn how the market operates. You have to consider the following:
Brokers serve as intermediaries between the currency buyers and sellers. There are so many brokerage companies out there, and traders do not have to pay them directly. There are websites that interested traders can visit before committing in trades.
These are mediums by which tradings are carried out. Most brokers are using free platforms where you as a client can access their services. It is highly suggested for beginners to begin with the demo accounts to obtain the desired experience level before the actual investment.
Signals influence the demand and supply of currencies in the market. These can be economical, political or social. Valuable information is available online.
Automated trading strategy is oftentimes used by Forex beginners. In this scheme, the well-experienced trader executes trades and later executed to the account of an amateur. But this will not happen without the consent of the trader.
In the end, your investment choices will depend on the kind of goals you want to achieve. You have to be well-educated with the stock market and Forex so that you know when to invest and take risks.
I hope we helped you have a quick look at what Trading in Stocks and Forex can offer you.
Feel free to ask questions and comment below if you have anything in mind.
Thanks again for visiting and I wish you good luck.