5 Easy Steps to Start Investing in the Stock Market

The stock market just hit the level that had in 1997. Billions upon millions of dollars had evaporated. Banks, mutual funds and individual investors are in shock. BUT all those news are making reference to the stock market indices, for example the Dow Jones Industrial Average.

The Dow Jones Industrial Average is computed with the stock prices of 30 of the largest public companies in USA.

The Dow can be down as an average, but certain individual stocks can be high and very profitable. To help you find those stocks, I will lay here for you 5 easy and fast steps.

1. Sign up with an online broker. With an online broker, you can do transactions as low as $9 per round trip (a round trip is a buy + sale of the stock). By law, the minimum to open the account with the stock broker is $3,000. That is the minimum money you need to start trading in the stock market by yourself. Please note that the online broker does not tell you which stocks to buy or sell. They just provide the online interface to do so, but the choice is yours.

2. Find a provider of accurate market data. If you search, you will find several internet companies that can provide you with the stocks prices online. Some of them can give you the live price of the stocks, in real time, for a monthly fee. Others (such as yahoo finance) will provide you for free with the market graphics and prices delayed 15 minutes.

3. Find the stocks on the move. Each day, there are companies with positive news. For example, a pharmaceutical company that gets a new medicine approved by the FDA. A defense company that gets a huge contract with the military. Or a company with a good quarter report.

4. Each day, start watching those stocks. Get a feeling of how they behave. In the beginning you must practice what’s called “paper trading”. That is, pick a stock to buy and sell the same day, but not invest any money yet.

5. Keep a written dairy for 30 straight trading days. Write the pick of the day, and why you think the price of that stock will go up. Make a note on the optimal time to buy it and the best time of the day to sell it. Please don’t overlook this step, and the knowledge you gain from writing it, will train your mind to pick the right stocks.

If you follow the above steps, I can assure you that you’ll become a proficient stock trader with big profits. I know for sure, because those are the steps I took myself to earn my living in the stock market.

In the stock market world, the days when the market is up are called “Bull Market”, and when the market is down are known as “Bear Market”. Well, this method you just read will work for you in bull markets and bear markets, because here we are talking about individual stocks and not about indices.