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My Newbie Experience: Stock Market for Beginners
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Here’s my “little” guide on the stock market for beginners who wants to enter the market now. Everything starts with us being a newbie (a person with no or little experience). A few years ago, I took my first (baby) steps into the world of the stock market (yayyy). I believe in two ways to learn something - through studying or through experience. I actually chose the latter hehe. I was shocked to see that I have a lot of misconceptions about the stock market.
Let’s get right to it. Here is a quick guide on stock market for beginners.
- As stock trading opens, a stock price goes up or down tremendously
- You don’t buy a stock because the stock price goes up for the last few days and it still goes up today.
- When you are holding a share and the stock price goes down and down, you can’t pull the trigger to sell it.
I always thought the when the stock exchange opens, stock traders always use the previous closing price as the buying price. And that is why they the financial news often reports about historical share prices or previous closing stock prices of shares. Well wrong wrong wrong. While this can happen also, you also need to consider this scenario: A stock trader buys a stock at a higher price than the previous day close. If your thinking why would anyone do that, I was thinking the same thing hehe. But analyzing this, some traders bid higher because they expect the price of a stock to skyrocket. Since they want to get in early, they bid higher than the previous close so they can be sure that there will be a match between a buyer (that’s the stock trader) and a seller (anyone currently owning a stock) when the stock market opens. Going the other way around, this also happens when the stock price is expected to go down.
Beginners usually make this mistake (like me back then hehe) because this is really counter-intuitive. If a stock price is already way up from the previous days, it will go down eventually. Well, that’s not always the case. At times, it continues going up on the next day. Why you say?! Because the company might be performing very well and people want to get a hold of this share. It may be the most active stock or currently the “star stock” (hehe just made that up). There are a lot of reasons actually. Remember that there’s always the right time to buy stocks. And also the right time to sell them (plug for the next topic hehe).
This is the other way around. You already have too much “paper losses” because the price of your stock goes down. A few days go by and it still goes down. Heck, your thinking is - well it will eventually go up at some point. Question you have to ask yourself is when will it go up. From my experience the longer a stock goes down, the harder it is for you to sell. Emotional attachment on stocks is a big problem for new investors. It’s like telling your stock broker that you already want to throw away those hard-earned money. You may experience a situation like these. When you see this situation, don’t let your emotions get in the way. If its the right time to sell, don’t hesitate one bit.
I believe that learning through experience is better than by just reading them. I really learn a lot by entering the stock market right away but it has its disadvantages (pocket-wise hehe).
What other experiences do you have? Share them by commenting below ^_^
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12 comments for “My Newbie Experience: Stock Market for Beginners”
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hi,i am currently working here in middle east and i want to start investing to stock market through citiseconline.please give me an advice what stock/s to buy to start with,the one/s that is/are not risky(i’m afraid i’ll get traumatized if i loose on my first “round”,hehe)more power to dotnewbie.
astig to. i really want to try online trading. pero nd ko lam san magstart. anu b ung best na online brokeraga firm? salamat…
I started getting interested on stocks from Company’s sponsored Employees Stock Option Plan and after 2 years, my company stock doubles. Hmmm… very easy money i believe.
Then i started getting actual stock investing way back 1994, i bought stocks based on rumors or tales from newspapers columns (remember those days wala pang internet) and there it is, rumors or hype are created by market manipulators in order to get public buying interest and after much hyping from markets manipulators stock price tanked.
Then, i dig investment books to learn more(also note wala pang libreng ebooks that time, so you have to buy expensive books) and from there i know who and how the stock market works.
For those newbies, i recommend you to read the ff books;
1. Reminiscences of a Stock Operator, a 1923 book written by Edwin Lefèvre which tells a fictionalized version of the early years of the life story of Jesse Livermore
2. Jack D. Schwager’s Market Wizards, New Market Wizards,and Stock Market Wizards.
3. Peter Lynch’s One Up on Wall Street.
You will learn tons of knowledge from the #1 Stock Operators mind Jesse Livermore to the #1 Mutual Fund Managers mind Peter Lynch and the successes of Americas fund managers in Markets Wizards.
There’s No free lunch in Wall (Stock) Street as they say. Cheers! and Happy New Year 2010
Dann´s last blog ..
this is very helpful information. thank you! I’m actually starting to have an interest in stocks and starting to read articles. Can you give me an idea how to buy stocks?
i’m a new to this,just want to start to buy stock but dont know how,i need help thanks….
I find this article very interesting. Im na OFW and want to start on stocks. Don’t have any knowledge in stocks as in “zero”. This will help me. Any online brokers you can suggest based on your exeperience.
I really had this interest in stocks when Petron had its IPO back in 1996 if I recall it right. I had really no idea back then what stocks are. A friend of mine one day just asked me if I had subscribed to the Petron IPO. An IPO for those who have no idea is the initial public offering of the shares of stocks of a certain company. The company is offering for sale to the public shares of stocks thru financial institutions mostly banks. The offer is posted on the frontpage or business section of the dailies (newspapers)and the the offer period is usually about a week. So you go to the designated bank with your cash and apply for the subscription of the shares. Going back to my friend I asked what the BS is he talking about. And he patiently explained it all to me. And that’s how I got the initial idea about stocks. Unfortunately, I was not able to subscribe to the Petron IPO for the simple reason of lack of funds. In the Petron IPO the price was 7+/share. If I was able to buy 1000 shares @ P7+ that would be P7000. After a few days that it got listed on the Phil Stock Exch (PSE) the price skyrocketted. The highest if I remember was in the P100+@ share. Imagine if I had the funds to purchase the shares my P7000 was now P100,000.00+ in just a short span of time. But the whole thing also got into some kind of controversy so that the price of the share eventually fell. So beware. The PSE website has an article on how to invest in stocks. You can also read on “HOW TO MAKE MONEY IN STOCKS” by William O’Neill. If you are very good in arithmetic bec this all involve numbers try to learn Trading stocks. Trading is now online. You can make a living trading stocks. Even if you’re in Egypt or Libya for as long as you can connect to the internet you can trade stocks online and watch your bank account grow. Right now I’m reading “Day Trade Online” by Chritopher A. Farrell. When you’re ready register with an online stockbroker. PSE website has a list.
thanks for posting. nice article. This is helping me a lot in pushing through my plans of investing in Stocks. Thanks for sharing your story Joel. I think my father bought some Petron Stocks back then, I saw the stock certificates. I never really thought how it went for him. I was just a teenager back then.
Hi,.. stock market has always allured me but ignored the thought of investing several times, out of being a “sigurista”. Several events occurred lately which inspired me to self educate about the PSE. I landed on your site and I must say it’s really helpful for a newbie like me. It’s the first time I learned that there’s a simulation game available! Wonderful… thanks and hope you can welcome some questions through email in the future.
Do you think it is wise to start with 5,000 rather than go for the 25,000 for starter? I am planning to start this October, trying to read as much as I can in regards to stocks.
PS: I would rather also learn through first hand experience. thank you in advance
Detailed due diligence is essential before you decide to buy a stock. That is the best advice I can give. This will definetely increase your earnings.
My strategy is simple : anticipate the market upturn.
I always buy stock not when they are in bullish mode..I normally select stocks whose PPS are going down (but I do a little bit of research first on why its share price is bearish) and then try to speculate and anticipate the upturn..Being able to get the correct timing of the upturn will surely reward you profits..But be careful when speculating the moment to offload your positions.