How Knowledge Can Make You A More Confident Investor

Investing in the stock or other financial markets is something that a lot of people wish they had the courage to do. But horror stories of financial crashes and stock market falls tend to put newbie traders off, and as a result a lot of wannabe retail investors don’t end up fulfilling their potential for earning some extra income While it’s always going to be an inherently risky business, there are some ways you can boost your knowledge and feel a little bit safer when laying down your cash on the stock markets.

Read the news

For traders who use fundamental analysis, the news is a very important source of information. It’s the place where industry developments with the power to shift stock prices are discussed, and knowing these inside out can give you a big advantage. If you’re worried about missing some information, it’s definitely worth subscribing to a service which outlines this week’s financial events. That way, you can extract relevant information at your own pace and use it to weed out potentially dubious or particularly risky investment choices.

Analyse prices

There’s a big debate in the trading world about whether fundamental analysis is the best route, though. Some traders, known as technical analysts, choose to look merely at historical charts which show the decisions of other traders. This can be useful because the only truly market-moving decisions are the choices of others to buy and sell. By using technical indicators to find trends in this behaviour, these graphs can come in handy for forecasting how shares are likely to move.

Practice using the info

Once you have this new-found knowledge, it’s vital to make sure that you know how to put it into practice. Without knowing how to distil information into actionable insights, there’s not much point in having it. One way to do it is to take advantage of the virtual cash demo accounts which many brokers offer. Once signed up to a service, you’ll be able to execute pretend trading orders and identify areas where you can use your knowledge.

You might, for example, see a list of possible companies to invest in, and notice that Amazon is included. From your research, you know that Amazon is about to launch a high profile new product service – and decide to choose a different company instead. By doing that in a test environment, you’ll soon get a feel for what knowledge is relevant and what isn’t – and you’ll be more likely to notice and remember the effects of applying your knowledge when your mind isn’t clouded by worries about actual investment performance.

Becoming a stock market investor isn’t for everyone, and it’s the sort of thing that can make even the most confident person think twice before going ahead. But it’s possible to become more knowledgeable about the way it all works by finding a good information supplier. Giving yourself the chance to put your knowledge into practice in a risk free environment first, you’ll soon become confident yourself and go on to what will hopefully be an excellent career as a stock market investor.

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