So you think you have what is takes to invest in the stock market? Well, you probably do. Investing in the stock market is not as hard as most people project it to be. If you are looking win big on your first try you are potentially setting yourself up for disappointment. Investing in stocks is not like playing lotto. Investing in stocks is an investment. There are many ways to make investing easier for the beginner.
Volume
Volume is the amount of shares available to purchase at one time. The volume is as important as the price per share. When investing you want to make sure the company has a high market cap. A high market cap allows for you to invest more money in the company. There are many strategies associated with volume such reducing the cost per share when the price drops. I.E If you bought 1000 shares at $2 and the price drops to $1 buy more shares when available. As a result of the price drop when you purchase more shares you lower your cost per share which enables you to double your money faster when the price goes up.
Activity
When monitoring stock which have a low price per share you want to monitor the activity over a 12 month period. I like to invest in necessity stocks as opposed to trendy stocks. I.E Energy stocks are a necessity stock therefore certain times of the year the stock is almost guaranteed to go up in price. A good rule of thumb the cheaper the stock the more impact of the activity.
Percentage
Instead of focusing on the points make sure you focus on the percentage. When you monitor the stock market you will see the percentage a stock went up or down next to the price per share. As long as the volume is there penny stocks offer the most return on investment because the activity has a bigger impact on the percentage. I.E If you buy shares at $.50 a share and the price goes up to $.75 a share then you earned a 50% return. Whereas if you bought regular stock at $10 a share you would have to wait for the stock to rise $15.00 a share in order to get the same return.
Penny stocks
Penny stocks are stocks which are available to purchase at less than $1 a share. Penny stocks are good for beginners because of the activity. Stocks should be looked at like buying real estate. You want you starter investment to be as cheap as possible. When you stretch yourself in your investment you put yourself at risk to do harm than good in your portfolio.
There are many ways a beginner can enter the market. If you decide to treat stocks like you treat a lotto ticket you cannot get upset when things do not go your way. Investing should be taken seriously. Good luck!