Trader logo

3 THINGS YOU NEED TO KNOW BEFORE INVESTING IN STOCK (Advice from a man who lost it all... twice!)

MUST READ!

By A. J. BiroPublished 2 years ago 3 min read
Like
blob:https://vocal.media/454e3752-3587-419a-a2dc-020876670167

Yes, you read that correctly, I am a man who has lost every penny to his name, twice, through investing in stocks without the knowledge to do so responsibly. In this article I will endeavor to educate you on necessary information you must have before investing in stocks.

1. DO NOT invest in stocks if you have a gambling addiction!

Make no mistake, the feeling of seeing your money skyrocket in stocks is the exact high one gets when hitting the grand jackpot on the pokies. The high that take you to the summit of life, the feeling that you will continue to win and the joy which never fades until you watch every penny disappear in-front of your eyes as you stand there l0oking at the empty screen, wondering why you couldn't have just pulled out.

2. Learn leverage!

If you do not already know what leverage is then you should not be investing in stocks. In this modern age the world in your oyster, or should I say, the internet is your free educator. If you have the drive and research skill then you will be able to learn everything you need to know about stocks through a variety of online sources, even Youtube alone has the resources to turn anyone into a master on stocks, however, often for how cheap they are, online courses provide the structure and information to speed up the process and focus you on the right path to learning about investing in stocks. Leverage refers to the value of your investment compared to the funds you have placed on a trade. Take for example a trade on Natural gas with a leverage of 1:10, if you invest $5,000 in natural gas, the total value of your position will be valued at $50,000. Meaning you can make a much higher profit, however losses also multiply by 10, meaning you can very easily lose the entire value of a position, leaving you with no money. This was how I lost all of my money... TWICE!

3. Invest what you can afford to lose!

This is perhaps most important of all and ties in largely with the first point about gambling addiction. When you are winning in stocks you are left with the overwhelming feeling of ,"What if?". This is the most dangerous emotion of all, as the "what if's" quickly turn to the sinking feeling in your chest as you up the amounts you risk to the point where you have lost more than you can afford to lose, so in a final gamble to win it all back you use the last of your savings on a whim short call, the price goes the wrong way and within seconds you see your precious account fade to nothing.

These are the 3 most important factors to consider when investing in the stock market, and this is not to say "Do not invest in stocks". Take the time to get to know stocks an how they work. Put in a very small amount of money and experiment with the market for months while you are completing an online course. Most brokers will offer a demo mode option when you are starting out and this may also be very useful. Most important during this time is to forget the "What if's?", because this weeks win could be next weeks lose everything, so take you time, enjoy the little wins and don't try to start doing backflips before you can even walk. I completed an online course and now invest a large portion of my money in stable long term investments while investing a small amount of money in higher risk stocks which I have researched thoroughly through knowledge gained from a rigorous online course. Have fun investing in stocks, and more importantly, STAY SAFE!

personal finance
Like

About the Creator

A. J. Biro

I am relatively new to the writing scene, previous experience has mainly been in copywriting. I am looking to explore other possibilities.

Reader insights

Be the first to share your insights about this piece.

How does it work?

Add your insights

Comments

There are no comments for this story

Be the first to respond and start the conversation.

Sign in to comment

    Find us on social media

    Miscellaneous links

    • Explore
    • Contact
    • Privacy Policy
    • Terms of Use
    • Support

    © 2024 Creatd, Inc. All Rights Reserved.