How to Learn About Stocks
Stocks are one of the key investment vehicles of many families, individuals and even businesses, and so how to learn about stocks is an essential question raised by many.
A 2020 report shows that 55% of Americans have invested in stocks, and the figure is similar for UK and European households. Many people are invested in stocks and shares but don’t actually know it, as their pensions, SIPP’s and 401’s are managed by professionals, and they don’t give much thought to where or what it is invested in.
However, although they may promise a good ROI over the medium to long term, perhaps somewhere between 7%-15% annually, they can be very volatile at times, and that's why beginners need to master the ropes before they start exploring their potential, and investing for themselves.
You can start learning about stocks with any material on stocks you can lay your hand on, for example helpful free websites like Money Mentor, financial magazines, or personal finance books such as our own Master the Art of Money, or any other of our recommended books that can be found in our personal finance bookshop.
But as a start, this article provides a guide on how to learn about stocks.
How to Learn About Stocks
If you are interested in how to learn about stocks, here are 5 different ways.
#1. Open a Trading Account
Although this may seem like a giant step for a potential new investor, it may be the best step for how to learn about stocks.
This is because these trading accounts provide lots of really useful information and data on many related subjects, and just by simply browsing through their websites for an hour or so a day (before you start to invest) will certainly help you learn all about stocks and shares.
You can easily find a good online stock broker or platform by using google and open a stock broker account in a matter of a few minutes and for free.
The aim is to have a feel of how the stock exchange interface works; familiarize yourself with the account interface and try out the free trading tools. If the broker offers virtual trading, you can also take advantage of it, which is very useful in helping you note make errors with real money.
#2. Read to Learn About Stocks
As noted in the introduction, reading about anything you wish to learn about is a great way to learn fast, and it certainly applies with how to learn about stocks.
Also, it is a cost-effective way to learn about stocks, unlike taking classes. Books on the stock market and financial articles can provide you with a wealth of information on stocks and shares, and it is well worth you taking a look at some great titles in our hand selected book shop here.
When learning about stocks, it is usually advisable to take one piece of information at a time, especially if you are a complete beginner, starting from the very basics and then growing into more complex concepts.
Some other sites that offer helpful resources about stocks and shares are Yahoo Finance, CBS MoneyWatch and Investopedia.
#3. Learn From a Skilled Stock Trader
You can also learn about stocks from people who have been in the business for many years. They can serve as your mentor to help you understand the nitty-gritty of the stock market.
This method has an edge over other methods because a mentor is committed to your success and so will ensure you understand all about stocks. You have the privilege of asking questions and access to guidance when you begin actual trading.
Your mentor doesn’t have to be someone who actually works or worked on Wall Street or in the City of London, or even in any financial services arena. They just need to have experience of being a successful and consistent investor over a long period of time.
So people who are keen personal finance investors who you may well already know of, are a great place to start.
#4. Subscribe to Stock Trading Sites
You can pay to watch stock market professionals and follow the stock market. This is another powerful form of stock education. You can view a stock chart, fundamental data, and these are good sources of exposure to the stock market.
Some recommended subscription services that you can subscribe to are Morningstar and investor.com. However, before choosing a paid subscription site, be sure it offers quality information about stocks in an easy-to-understand manner.
Paid for services are usually only necessary when you have become a more experienced investor and trader, as much of the basics of how to learn about stocks can be found for free.
However, if you do want to take your investment or trading strategy to the next level, then it may be worth taking a look at this stockopedia review, as we have been using this software for years now, and find it very useful indeed and cost effective.
You can try Stockopedia for yourself for two weeks free here.
#5. Practice Investing and Trading
Now, it's time to get real close to the real deal. Stock market simulators are useful tools for newbies in the stock market to master the techniques of stock trading and investing.
You can use virtual trading or paper trading to get a feel of the real stock exchange performance, but in today’s world of modern technology we would suggest you jump straight in with a investing platform such as Fidelity. Gone are they days when you pick your stocks from a Sunday newspaper, and then use pen, paper and a calculator to work out how they have performed each month (like we did in the old days!)
Free trading platforms that operate on a global basis, such as FREETRADE, provide a perfect solution, allowing you to track real-time market movements, make trading decisions, try different strategies and analyze the results without having to spend any real money until you are comfortable with how it all works.
How to Learn About Stocks – The Bottom Line
Information on how to learn about stocks is widely available if you know where to look. It exposes you to the different ways you can master the stock market as a beginner.
We very much hope this guide has helped you in finding out a little more about how to learn about stocks, and that you are now ready to get started. Good luck.