It’s a rite of passage, learning how to manage your own money when you get your first “real” job. From every direction people are offering suggestions as to investments into which you can put any extra money that you may have at the end of the month.
In all likelihood you’re thinking to yourself “what money?” But this simply confirms how careful you have to be in deciding how to invest, and underscores how vital it is to do the work of teaching yourself how to learn the stock market, about bonds and mutual funds, and even more sophisticated investments such as stock options.
Here at stock options explained we get questions quite frequently that do not specifically pertain to options, but rather from people trying to understand the stock market, which is after all the basis for options. In fact you can be sure if you have not yet learned how the stock market works, even stock options basics and certainly all options trading strategies will forever bewilder you.
Three tips for learning about the stock market
1) Learn from people with actual experience in the market. Perhaps you have an older relative or friend who is quite savvy financially, who seems to have a good handle on most investments. Don’t be afraid to ask detailed questions of them, because in addition to knowing the rules of the game as it were, you can trust them and be quite sure that they’re not trying to sell you on the particular investment.
2) Bookmark and frequently visit websites like Motley Fool and MarketWatch, as they give the opinions of a broad range of market analysts and vary their approach to cater to seasoned investors as well as neophytes. Sites like these and many others also function as educational portals, and if you’re interested in learning the stock market they’re a great place to start for this reason. Another good thing about many financial sites nowadays is that they incorporate a forum where readers of the site can participate in financial discussions and ask questions. Everyone was once a newbie investor, it’s nothing to be ashamed of, and you have a wealth of information in the form of other people that you can meet on financial forums who will be more than willing to help you learn the stock market.
3) Probably the very best piece of advice I can give for anyone who’s interested in becoming proficient in investing in stocks is to paper trade. If you’re not familiar with paper trading, you should know that most online brokers offer you a practice account online with an amount of virtual money that you can use to trade stocks, options and other investment vehicles. Your broker will keep track of how well you do on each trade and you’ll be able to keep very close tabs on just how well your hunches regarding stocks that you trade are translating into profits, or losses.
If you are wondering how to learn the stock market do yourself a favor and remember this tip: take your time, paper trade and find some good trading software to help you, and do not make the mistake of thinking that since you are understanding stock market basics you will easily be able to turn a profit in investing in stocks, or stock options for that matter. There is a huge difference between learning how the stock market works and applying your new-found knowledge to consistently make money in the market.