How do I invest in the stock market? A complete guide to trading shares

Currency trading

When you think of investing and trading, there's a good chance that stocks (or shares) and the stock market are what first comes to mind. But how and why invest in stocks? Learn the fundamentals of investing in stocks, including the approaches and skills you'll need to invest and trade with confidence.

A share is like a small part of a business. You only need to own 1 stock to claim ownership and claim a portion of the company's assets and profits. In general, stocks form the basis of most portfolios and have historically outperformed other investment types over the long term. There are many ways to participate in the stock market, but two basic approaches can be distinguished: "buy and hold" or short-term speculation.

The "buy and hold" approach is for investors who are more comfortable with a long-term approach. They do basic research into a company's past and present earnings, examine the outlook for their industry, and read expert reviews on the stock. The goal is to find and invest in quality stocks that will provide a long-term return or dividend. The investor who buys and holds stocks is therefore less concerned with the daily improvement in prices.

The short-term speculator, or trader, focuses more on intraday or daily fluctuations in the price of a stock. He often takes a more technical approach, looking at charts and statistics that can give a glimpse of where the share is heading. The goal is to buy cheap and sell for more to make a quick profit. He can also participate in the "short sale" of a stock, which allows him to sell a stock that he doesn't actually own. This strategy is used when a trader believes that the price of a stock will fall, allowing him to profit from a sinking market. Short selling a stock can result in unlimited theoretical risk if the stock's value increases in the market.

These two general approaches are just a basic sample of how stocks can be used either as a long-term investment or as a short-term speculative tool. How you decide to trade stocks should only depend on your goals and your tolerance for risk.

Here is a series of articles on stock market trading that will help you understand the basics of stock investing:

Types of brokers

Trading stock market shares

Learn how to trade stocks on the stock exchange. An introduction for traders and investors who want to know how the online stock market works. (coming soon!)

trading commission free

Trading stocks commission-free

Is commission-free stock trading really beneficial for investors? (coming soon!)

NDD DD trading platforms

How the stock markets are organised

Initial public offerings (IPOs) on the primary market, transactions on the secondary market, private placements and repurchase of the shares of a listed company. (coming soon!)

A book B book

Understanding how the stock market works: a guide for newbies

Basic knowledge of how the stock market works can be an important advantage. So here is a concise guide for for you to get started in stock market investing. (coming soon!)

Choosing a broker

How should I choose my stock broker?

Choosing a stock broker is more complicated than it looks. The right stock broker can open up investment opportunities for you, but the wrong one can limit your options and drive up your costs. (coming soon!)

Stock market protection

Compensation systems for stock market investors

The protection of stock market investors from their stock broker's bankruptcy and the compensation regimes in various countries.

Main forex currencies

How does one analyse stock market shares?

A basic stock analysis helps you identify the best investment opportunities. Here are four measures of a company's valuation to help you analyse a stock (coming soon!)

Forex swap

What are the different types of stocks that are traded?

Here's a summary of the most common types of stock investments: Blue Chip stocks, tech stocks, cyclical stocks, speculative stocks, and defensive stocks.

Forex swap

How to invest when the market is declining

Declining markets are good news for skilled traders and investors. Keep these 6 things in mind when the stock market is going down. (coming soon!)

Advantages of forex trading

How can I identify the best stocks for Day Trading?

How to choose the best stocks in the market for day trading strategies. (coming soon!)

Advantages of forex trading

10 tips to successfully invest in the stock market

Buying stocks is the easy part. The hard part is choosing which stocks to buy. (coming soon!)

Stock market crashes

The biggest stock market crashes in history

Stock market crashes are just a temporary change in the long upward trend of the world's stock markets. And for traders, they can be synonymous with great buying opportunities.

FTSE 100 index

FTSE 100: the share index of the London Stock Exchange

The FTSE 100 index is the benchmark stock market index of the UK. It consists of the UK's 100 largest listed stocks, measured in terms of liquidity and market capitalisation.