Before Making Your First Buy Read These Set of Rules
Following are some of the ideas that you must be familiar before making your first buy:
- Learn Financial Metrics and Definitions.
It is significant to know and learn the definitions of metrics like the P/E ratio, earnings per share, return on equity and compound annual growth rate. You must know how they are calculated. You must also be capable of comparing different companies using these metrics.
- Know Some Popular Methods of Stock Selection and Timing.
It is important to know how “fundamental” and “technical” analyses are performed. You must also know the difference between them. Also understand where each is best suited in a stock market strategy.
- Understand Stock Market Order Types.
Knowing the difference between market orders, limit order, stop market orders, stop limit orders, trailing stop loss orders, and other types is very important. They are commonly used by investors.
- Know about the Different Types of Investment Accounts.
It is good that you know about the cash accounts that are most common but you must also know about the margin accounts that are required by regulations for certain kinds of trades. It is important to understand how margin is calculated and the difference between initial and maintenance margin requirements.