You can’t turn into the “wolf of Wall Street” without knowing the basic tactics of dealing with the stock market. Jordan Belfort grew into the stock market at a young age, because he mastered the basics of investment. A profitable investment doesn’t happen through luck, but instead, it happens with a few simple principles that have been derived through the experiences of the millions of stockbrokers.
Here are some basics on investing in the stock market and making quick and easy money.
- Set a plan on how much money you can invest for a few years. Investing in stocks means storing the money you have away for a few years. If you don’t need it for college expenses, purchasing a home or building an asset, you can do away with the money. You can also place half of the money you have saved in the stock market, and keeping the rest in your bank.
- Learn about risk tolerance when investing in stocks. Risk tolerance means the way a person responds to risk and the level of anxiety they get with the fluctuation of the risk. It is the level of how much a person is willing to take a risk in pursuit of favorable outcomes. This means the person can risk $10 for winning $100. Risks with stocks exist but they may not be as high as you think they are without an understanding of them. The cooler you are with risks, the easier it is to make analytical decisions.
- Understanding emotions of the investors is another important factor. A company’s prices are majorly affected by the emotions of investors. A price decline in a stock occurs usually due to negativity of emotions of investors, and vice versa. A “bear” in the market is the person with negativity in them, while those with positive counterparts is a “bull”. There is a constant battle between a bull and a bear and these fluctuate the market prices. So when buying a stock, you should learn about the ups and downs linked to it.
- Learn about the stock market basics individually. The stock market is actually a market of stocks. Sometimes all the stocks move together in the market, and sometimes one stock may rise higher than the other. Take a learning on financial metrics and definitions, popular methods of stock selection and timing, stock market order types, and different types of investment accounts.