How to Invest in Common Stock in the Stock Market


18 May 2020

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The stock market

Investing in the stock market is risky business. However, there are many areas in which one can invest and reduce or increase a risk. Generally, the greater the risk, the greater the reward. The investment areas are options, mutual funds, common stocks, preferred stocks, government bonds, etc. Government bonds and mutual funds are the risk list. However, the returns on these investment instruments are very low. Yields generally range from about 3% to 5%. The area in which I am specialized is in ordinary shares and the objective of this article is to invest in ordinary shares. Investing in common stocks carries a higher risk than government bonds and mutual funds. However, if you do your homework properly and thoroughly, you will reduce your risk significantly and the rewards are usually excellent.

Preparing to invest in the stock market

Before you can invest in the stock market, you will need to open an account with a reputable brokerage company. It is preferable to use a bank that has a brokerage division. The reason for this is so that you have easy access to your money. That means you can transfer money from your brokerage account to your bank account instantly. Otherwise, money should be mailed to you when you make a withdrawal from your brokerage account.

You must then register to access your account online. Once this is done, you should have real-time access to the stock market. Most reputable brokerage companies will provide you with this service depending on your deposit. The more money you deposit, the more services you get for free. Note: You don't need the 15-minute delay in real-time stock prices. This is not good for you. You need real-time stock prices. Once this is set up, you are ready to rock.

Selection of common actions

The next thing to do is find the stocks you want to invest in. This part takes a long time. What I did to find my stocks is as follows: At the end of each business day, I examined the stock market of interest and examined all of the best performing stocks for the day. By doing so you will get a stock code which is necessary to buy, sell and research stocks etc.

The next thing you want to do is research each action that interests you. You want to see the financial statements and balance sheet for 5 years. The financial statements will tell you if the company is making money or losing money. In addition, a financial statement shows you a trend of sales and expenses of the company. Therefore, you can determine if a company is growing or not. The balance sheet will tell you if the company has money and assets or if it has debts. If a company's liability is 25% of all its assets, that is a solid financial company. However, if a company's liability is 75% of its assets, that company has a serious financial debt and will be a very risky investment. To be successful in the stock market, you will need to know the financial statements and balance sheets.

Next, you want to investigate what a company does as a business. In addition, you want to know who are the holders of shares of a company, who is the CEO, who is on the board of directors, if the company pays dividends, etc. In addition, you want to see all the news Headlines about a company for about 5 years. After all this and that he is satisfied with the company, he places it in his portfolio. Do the same procedure for each company that interests you. Note: you must diversify your portfolio. Invest in companies that are in different types of businesses. For example, invest in companies that are in various business segments: mining, manufacturing, services, etc. Once you have multiple companies in your portfolio, you are ready to do business.

Monitor the stock price

The trick to making money in the stock market is to buy low and sell high. Therefore, time is very important in the stock market. All actions have a pattern. There are peaks and valleys in every population. Certain news will cause share prices to drop or rise. These are the waves you have to look for. Therefore, buy low and sell high. To control the price of a stock, you will need to create a stock chart. Your brokerage company can provide this service.


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