5 Quick Starter Stock Market Tips for Beginning Traders

Good morning, everyone!!!! Due to popular demand on my Snapchat story (@lorenzoCatalan), here I am, actually creating the content you guys requested; isn't it amazing? Almost makes you want to ask for something cooler next time, huh? Throughout the Vocal Media outlet, I plan to release a series of information ranging from very general information like you'll receive in this post to more specific information that you will receive in later posts.

Also worth noting, I am a fourth year undergraduate university student studying biology with a minor in sociology but a passion in entrepreneurship and swing trading. I am not being paid to promote any of the sources or techniques that I will reference regarding brokerages, trading techniques or anything else. Everything mentioned is explicitly my opinion and is not professional advice.

Now that we have that stuff out of the way, a little about me. As stated above, I am an undergraduate student based in Indiana with a passion for entrepreneurship and swing trading. A few years ago, I became curious about what made rich people rich. The Google search results stated that ownership of land, stocks/bonds, and passive income are the primary reasons for wealth accumulation. After this discovery, I began to do my research and throughout this little series of posts, I'll be sharing my discoveries with you.

(If you'd like to skip the boring stuff just come here.)

1) Find a brokerage.

There are many different brokerages to choose from, and each has its own advantages and disadvantages. Currently, I have five brokerage accounts. To start off, I would suggest using Robinhood. Robinhood is an online brokerage, which has a very user friendly component to it; however, for those who are more experienced it lacks a lot of detail. Robinhood also allows the users to purchase stock in a company commission free!! Yes, you heard right folks, commission free. This may not mean anything to you now, but basically it means you don't pay a fee every time you buy a stock, which is great if you're starting off with just a few bucks.

After Robinhood, I would suggest Stash. Even more user friendly than Robinhood, Stash is an online brokerage that is most beneficial to those who are coming into the investing world with little to no knowledge at all. Stash has integrated a point reward system that helps users along a path to a diverse portfolio, which often leads to a healthier and happier investing experience. Primarily, Stash functions on the user purchasing fractional shares of companies which may be less risky than simply purchasing the stock of a single company. Stash is best for the beginning user who would like to invest money, however does not wish to actively do research. Stash also has a fee of $1.00 a month up until your account has surpassed $5,000 which it will then be charged 0.25% per year which is $12.50 for a portfolio of $5,000.

*Quick Breakdown

For all of you sports fans out there, here's an analogy to break down the difference between stocks and fractional shares. Think of your favorite sports star, they are the stock, and now think of your favorite sports team, they are the bundle of fractional shares. When the player does well you get happy, providing a positive return. When the team does well you also get happy providing positive return. Now say favorite said player got injured during a game (a stock beginning to perform poorly), this would now depreciate the value of the player because they will not be able to perform as well being injured. Now for the team, if a player gets injured, the other players on the team will compensate for the player or company that isn't doing well and can still overall provide a positive return at the end of the day.

2) Fund your account.

Next, you'll want to be able to provide a consistent amount of money in your account; whether that is $5.00 a month or $500.00 is up to you. You can choose to place all of the money you wish to invest into an account all at once, or over the course of a few weeks; neither is better than the other, but for beginners, spreading it out may be a better choice. Why you ask? Well, the very reason a stock makes you money is that the price fluctuates. If you have $100.00 to start and company XYZ you want to buy is $10.00 and you use the first strategy, you buy 10 shares when the price is $10 using up your entire $100.00. Well say the President tweets something which causes shareholders and other companies to react in a way that depreciates the value of the stock and it drops to $9.00 a share, your once $100.00 is now worth $90.00. Say instead, you read my little quick tip guide and you decided to spread it out and invested $50.00 today and $50.00 next week before the tweet it was $10.00 so you got 5 and after the tweet it was $9.00 so you still got 5 but with 5 dollars left over and say a few weeks later everyone forgets about the tweet and the value goes back up, from the stock you bought at $10.00 will now be broken even and for the second half you bought at $9.00 you will have made $5.00. Keep in mind this a very simple explanation. There are many different factors that contribute to a the fluctuation of stock price and overall one strategy isn't better than the other.

3) Know yourself.

Are you a person who likes to live on the edge, taking risks and feeling the adrenaline? Maybe you're someone who is still hiding in their doomsday bunker from 2012. From aggressive to moderate to low risk, there is a stock for everyone. Aggressive stocks are very volatile, meaning that they are unstable and move around a lot this also may provide the greatest return in the shortest amount of time or the greatest loss overnight. Moderate investors sustain a moderate amount of risk but also a moderate amount of profit in a good chunk of time. For the low risk folks, these companies tend to be well-established, may not make you rich in a year, but it's certainly better than keeping it in the bank.

(If you'd like to invest passively like something on Stash, it is okay to stop reading at this point, I appreciate your time and attention. Feel free to share and whatever the cool kids do today. Just remember I love ya and don't forget to add value to someone's life today.)

4) Find a pattern (more advanced traders who are not using Stash or similar fractional share brokerages).

No pattern is better than another once you figure out your niche. There are many different ways to make money in the stock market, and not all of them are trading and I do not currently understand all of them either. A quick Google search in common patterns may help clarify. As stated before, there are many patterns, you only need to know how to identify a few of them to begin making money. Find cool patterns you like. My faves are horizontal and ascending triangle simply because they're the easiest for me to understand.

5) Get committed.

Okay, so we've found a brokerage we like, funded our account, figured out our investing personality, and found a cool pattern we can understand. Now it is time to stay faithful. Again, make sure you have mastered a pattern before you begin investing. The market will teach you interesting things. The reason I say stay committed is because money can only be lost if you exit a position (selling your stock) during fluctuation. If you know how to have a healthy relationship with a human you can have a healthy relationship with the market. You only lose if you walk away in a low period. The smartest investors are confident with that what they have, know it is promising and worth investing in, so even in the low periods, instead of selling they actually invest more. In order to stay committed you must be in communication, doing research, reading earnings reports and such because all of these things will contribute to your confidence in the company. In every relationship like the market, there are ups and downs; know the company well enough to know where they are going in the time frame in which you plan on being with them. If you can stay faithful to a good company, investing in the low periods and knowing you've done your research well enough to ensure great return, you will have found a good thing.

I would just like to thank every single one of you who have been following me on this journey. Thank you so much in advance for showing love in any way you can and following me on this journey to financial freedom. Thank you, and see you next time :)

If you'd like to use Robinhood or stash, follow these links and get your first stock on me:

Robinhood

Stash