Sitting on a pile of cash is not a good idea. It’s commonly known that money should be working for you. Money that sits in place is lost money. Therefore, it’s a good idea to invest at least a part of your savings. I’ll help you discover how to make money trading stocks at home.
How do you invest? Well, one of the most popular forms of investments in Stock trading. But wait, isn’t it the complicated thing stressed guys in suits do all the time in New York? I guess it partially is, but Stock trading has evolved since that time a lot.
How do you trade stocks at home?
Well, today, most of the trading happens online, through brokerage accounts.
What is a brokerage account?
A brokerage account is very much similar to a bank account. It also requires you to fill in a form, supply a proof of identity, but what’s more, it requires you to choose a funding method, which in this case, might be your bank account.
This account allows you to trade stocks from the comfort of your couch, as long as you have the money available, of course.
What should you consider when choosing a brokerage account?
Most importantly, commissions and fees.
Nobody likes paying extra, so its a good idea that you get good research before you sing up for a trading account. Make sure you dig through all the pages to find the exact amount of all fees and payments you need to handle when trading with a certain broker website.
You can find some that offer commission-free trading, but again, don’t get fooled. Nothing’s free in life. If there’s no sale commission, there probably is something else, so be sure to read through the policies and don’t get surprised.
Good places to start digging are:
Those are commission-free platforms, meaning you don’t pay a cent for a trade. I suggest you at least go and read their rules and requirements.
What do you do after you opened a Brokerage Account?
Practice makes perfect, as they say, so before you start trading big bucks, it’s good to get a grip on how it’s done.
Open a free demo account, where you trade with non-real money. It’s like a trading game. Although this might seem pointless, it’s a very good idea to do so.
If you’re just diving into trading, it will take you a huge amount of reading about it, so you might as well in the meantime practice your trading and research skills on a demo account.
You’ll learn a lot. You’ll come across things you’d never expect to happen, you’d never think of. Trading on those platforms happens the same way as regular trading does, except, the money isn’t real.
When you’ve practiced enough, it’s time for a real deal.
You need to be monitoring the stocks every day.
- Wake up – check the stocks.
- Go to sleep – Check the stocks.
- Break at work – Check the stocks.
Like, a couple of times a day every day.
Learn how the market fluctuations work. You can’t just jump in and start trading random assets. By observing the market, you learn how this stuff works and lives.
Then, when you feel like it’s your moment – Buy stocks.
How much should you invest on your first purchase?
To be honest, there’s not really an answer to that.
It depends on what you want to achieve. If you just want to see how this works with real money, maybe try Penny-Stocks.
What are Penny-Stocks?
Those are cheap assets, under $5 each. This means you can usually buy a lot of them. Or just one if you so desire. There’s no rule on how much you have to buy.
Penny Stocks are a topic for a whole other article. They require you to trade a bit differently.
Answering the question, It might be a good idea to invest around a $1000 on your first purchase.
Of course, you can go less than that, but if you profit, it won’t be as significant.
On the other hand, you can go higher, but if you lose, it will be a bigger pain.
The thing about stock trading, It’s a game of risk. And frankly, quite a high risk. In order to profit, you usually have to invest a lot of money. You might only win 1% of your investments, which gives you 10 bucks on a $1000. This might not seem like a lot, but if you invest a million dollars, 1% is 10.000 dollars. You get the point. The more you invest, the more you risk, and the more you win or lose.
Higher the risk, higher the reward.
How can you invest?
Unless you’ve been living under a rock for your entire life, you’ve probably heard of day-trading.
Day-trading is a process of buying and selling stock the same day. It works very differently to usual, long-term trading, and is a concept that’s worth diving a little bit deeper into.
Apart from day trading, it’s up to you how you go about your capitals.
You can hold onto them for a month, a year, a decade. Just until you decide it’s the best time to sell them for profit.
How much money is there to be made?
A lot ! Professional traders get around $5000 of net profit monthly, but you can’t really average it like that.
Stock trading is such a fluctuating business, that it’s hard to predict or average the profits. Some people profit $10.000 and some lose $10.000. It all comes down to your ability to judge the status and value the risk.
How to make money trading stocks at home – Before you start trading
You should get familiar with tax regulations regarding stock trading in your country.
In the states, the IRS encourages long-term trading, meaning your tax on the stocks is lower after you’ve held onto them for longer than a year.
Furthermore, you could join online trading communities. People might share a lot of valuable stuff around that could help you with your future trades. Be sure to check on that.
After you’re done researching about trading, stock exchange, and all the cool stuff, it’s time to adjust your mindset.
It might be exciting to think that you can buy and sell assets with such ease but hold your horses.
Trading stocks is a tough job, requires a lot of knowledge, risk management, market analysis, and people dedicate their whole lives to it.
Of course, you can do it as a hobby, but be prepared to face the consequences of your decisions. I’m not saying it’s bad to trade stocks as a hobby. You can make a lot of money doing that. But be aware, that it’s not as easy as it seems.
Don’t panic when you see the price drop, it’s common for stocks to drop drastically and then get back up. When you see the price rise, learn to judge whether it’s the right moment to sell.
It’s a lot of information to process at once, so why don’t you sleep on it? Get a demo account, start reading, and off you go!