Where do I start if I want to buy and sell stocks

Many people think that buying stocks is a difficult thing and are not really sure where to begin. Well buying and selling stocks is rather easy it is the risk that can be associated with it that many people are scared about that keeps them away.

When you buy a share of stock you are basically buying a part of that company. For example if I buy a share of stock in Amazon (AMZN is the ticker symbol) then I own a small part of that company. The risk comes in to play as the stock climbs and dips over the course of time. There are ways to minimize this risk which I will get to below.

Here are some of the most important tips that I can pass on that have helped me and hopefully they will help you.

Read - Find books on investing, trading stocks, the more you learn the more you minimize the risk and better prepares you for trading stocks. I've included some amazon books that I found helpful.

Practice - As you are reading practice trading on paper, either in a notebook or use a spreadsheet program to monitor your practice trades. Watching CNBC can also help you with practicing. If you're not sure where to start you can start with CNBC pick a stock at the bottom of the page and visit Yahoo's Finance section and type in the ticker symbol.

Learn about Risk - As you trade you are putting yourself at risk of losing substantial amounts of money.

So only put in what you can afford to lose. One way to mitigate risk is to "dollar cost average" this averages out the cost you would pay for a stock. For example. If you buy stock 100 XYZ at $50 for a total of $5,000 and then it drops to $25. You have lost $2,500 but if you buy 100 more shares of XYZ stock at $25. You average the cost paid for this. And you end up with an average cost per share of $37.50. Which means you have mitigated some of the hit you took. Now it only needs to go to $38 to make a profit instead of $50.

Research - One of the best tools on the web that a novice and expert trader alike can use is http://finance.yahoo.com it is a great place to start to learn. You can also use it to research a company to see if it is a good investment and will be a profitable trade.

Important Terms

Ticker Symbols - These are the "codes" given to a stock that will help you find the stock. You can search for a ticker symbol by the name of the company, or you can search for the name of the company and get the ticker symbol. Some examples of ticker symbols are Advanced Micro Devices(AMD), General Electric, (GE), and Evergreen Solar (ESLR)

Exchange or Market - these are where stocks are traded. There are many many exchanges and markets. For example you have the New York Stock Exchange, the NASDAQ, and the Chicago Mercantile Exchange to name a few.

Index - An index is basically a list of stocks that are grouped together under one ticker symbol. For example the S&P 500 (Standard & Poors) Index includes 500 different stocks. It is a much more accurate measure than the OW (Dow Jones Industrial Average). Both of these are two examples of the hundreds of different Exchanges.

Brokerage Accounts - Once you are comfortable you are probably at the point ready to open a brokerage account. Brokerage account basically acts as the intermediary for you to purchase the stock through. There are two that I have used and so far been pleased with and will discuss. However there are others out there, but since I have not used them I can not say if they are good or not. I suggest you visit some of the sites and read about them for yourself. Scottrade, and eTrade are two examples but you can do a google search for discount brokerage, or stock broker.

Sharebuilder - If you are new to all this then I would highly recommend this for a person new to investing. They give you many useful tools to start off with. You can setup an investment plan where it will withdraw funds from your bank account and automatically invest them in a set of stocks or funds that you choose. It also has a good interest rate on its savings/Money Market account.

TD Ameritrade - This broker is good if you plan on buying and selling stocks on a regular basis. They also provide a large amount of research tools similar to what Yahoo provides, they also provide a few different trading platforms which give you in depth charting features. As a final point they have access to a broader range of Markets to trade on.

Once you have your broker and you have been reading and practicing for quite a while then you might be ready to start making trades. You however must investigate the companies you are interested in. Trading stocks is not a get rich quick scheme and like anything you have to work towards it.

***This information is provided for educational purposes only and should not be used to replace advice from a professional. Trading stocks you need to do your own due diligence before becoming involved in the stock market. ***