How to invest in shares? –Complete guide

When most people talk about investing in the stock market, including those who don't know this world well, a specific product comes to mind above all: shares. And it is that all of us, at some point, have heard of them, be it in movies, on the radio, in the news, etc.

And it is understood that this purchase of shares is what gives money when you invest in the Stock Market, but in reality, this step is the one that matters the least. The process to obtain benefits is much more complex and goes far beyond a simple purchase action, but many neglect it and, in the end, end up losing their investment.

Today we are going to see a few tips to avoid typical mistakes when investing in stocks.

Without a plan, you go blind...

Imagine the following: you have bought an X number of shares without thinking about it much because you have been told that you are going to make a profit from it in the short term. But, you have questioned all these things:

1. How long are you going to keep having those shares in your possession?

We recommend that you do not hold them for an indefinite or very long period of time at first, especially if their value is not increasing. The ideal period will dance between a few days and a few weeks.

2. When are you going to sell them for considerable money and how much do you intend to earn from that sale?

Do not lose your head thinking about earning very high percentages of profitability, at least at the beginning. Around 8% is a very acceptable figure to start with.

3. How much can you lose? Are you willing to take that risk?

What maximum percentage of losses would you take? Put a number, a specific figure, whatever you want, but put it. And be very clear from the beginning because later it can be very big for you if you are not mentally and emotionally prepared. Our advice is to never let the losses be greater than 5% of your trading account. And that already seems like a lot to me, if you can keep it below 2%, the better.

Each thing at its time

Don't be in a hurry and don't go shopping like crazy without having studied the market situation. Wait to buy when the Stock Market is rising, that is the best moment. How To Get Into Stocks

Don't listen to the siren songs

You will hear a thousand pieces of news that will make you think that buying certain shares will be very worthwhile. Or someone will give you a super secret "tip" that will make you a lot of money investing in such a rising company. And you, you will fall... because most people fall at first. Most likely, you will end up losing the invested capital.

Keep in mind that financial news manipulation exists. Surely behind it are hidden a lot of interests from each other that will not favor you. Therefore, it is recommended that you always think for yourself, that you investigate and that you learn to do fundamental analysis to study the real state of the markets, of the companies, etc.

Buy the correct amounts of shares

If you don't know if what you are going to spend on a stock investment is a lot or a little, find out!

And be very careful with the losses that you may have due to the commissions that are charged to you. Because even if you make a good investment, if you invest little, surely everything (capital and profits) will go away to pay those commissions. A block of 600-1000 euros would be right from my point of view.

Remember: a cautious person is worth two. If you see the price of those shares go down a lot, give the order to undo the position to your broker. In other words, make sure you control your STOP LOSS very well because if necessary, it will be your best friend.

When putting it in, look at the recent price swings you're watching. You can look at its historical graph or look for the price of the shares of the company that interests you on the internet. For example, if you see that Coca-Cola has been stuck for five months at a minimum price of 25 euros, buy, and as soon as you do, set your stop loss at that number: 25.

What do you need to be able to buy shares?

Find a stockbroker.

You will need it both to buy shares and to sell them. If you don't know what it is, a stock broker is a person (or company) that is authorized to carry out these operations on the stock market.
And by the way, we highly recommend that you always look for a broker regulated by a recognized entity. It is important to support you.

Well, you have to tell this person or company what you want to buy or sell and the amount. In exchange for carrying out this task, the broker takes a commission (also pay attention to the commissions and choose a broker that interests you in that sense)

Today it is easy to hire the services of a broker because you can find them online and do it from there. You open an account with him and from there, you send your orders.

Also, keep in mind that if you choose an online broker, you can buy shares whenever you want, which is easy and comfortable, but keep in mind that the orders will be executed only while the markets are open. In other words, you can launch your orders on Sunday, but maybe they won't be executed until first thing Monday morning. However, they remain saved or programmed.

Do I need more than 1000 euros to start buying shares?

This is very subjective and they will give you a thousand different opinions. In principle, if what you want as a newbie is to begin to familiarize yourself with the Stock Market and learn, we would tell you that around 600 euros (that you have earmarked only for investment) would be enough for first contact.

In any case, if you have more capital to devote to learning about stock investing, all the better. Put yourself in about 10,000 euros as the ideal figure. But of course, most of us do not have that figure in our beginnings, so start with what you can within that range.

What is super important is that you do not invest without a head. Learn first by practicing with smaller amounts and start to know how to earn to increase your investment when you are already at that point.

What kind of stocks should I buy?

You can start by investing in shares of companies that you know are normally stable. The IBEX35, Endesa, Telefónica... (to give you some common examples, it does not mean that they will always be safe values) The objective is to opt for options that are not likely to give you big scares in your first forays into the Stock Market. And very important too: keep an eye on the markets, their weekly rises and falls.

Another tip! If a company is not being talked about in the news, it is a good sign to invest. Remember what we said before about hoaxes and manipulations!

How many shares should I buy?

To begin with, a purchase of a value of about 600 euros is correct for a first test on the market. And remember to keep in mind the issue of commissions.

Can I have an idea of ​​how much money I will earn?

Well no. There are endless possibilities depending on each scenario that arises. No one is absolutely sure of anything. But we can have indicative clues of how we can act to get a benefit from our operations with shares:

• The first thing to keep in mind is that profits usually take time to arrive. Obtaining benefits normally requires a few months of practice at least.
• The second is to assume that the market is hard to beat even for professionals. So don't set yourself the initial goal of earning a two-figure percentage profit. 8% is a reasonable amount.

What orders can I send to my broker?

There are several types: those based on how much you buy ( limit orders ) and those based on when you buy ( market orders ).

In the former, you choose at what price you want to buy, but you have to wait for the price to reach that figure. In the second, you buy at the moment, having fixed very well before the price set by the market and taking into account that this price can vary between the time you launch the order and it is executed.

On the other hand, we have Stop Loss orders, which are used to stop any possible losses you may have. These orders undo your position if the price goes in the opposite direction to what you want.

I recommend that you always place Stop Loss orders for safety. In addition, in the event that they are not executed, you will not pay anything for them, because the orders that are sent to the Stock Market and in the end are not launched, are free. You don't lose anything by launching them and on top of that you control the risk better!

Careful with…!

Derivative products and leverage. If you are a newbie, keep in mind that this greatly multiplies the risk of the operations, and you still have a lot to practice. Always start with minimal risk. Remember that you will be solely responsible for your results and no one will return the money you lose. So always try to control your decisions and operations as much as possible.

If you are interested in the world of investing with shares, I recommend that you sign up for the Free Shares Course , which we only launch on specific occasions and which usually fills up quickly when we open it. You can reserve your place from now to start next Monday, November 9 and until the 16th . It is a very good opportunity to continue learning to invest with actions that we would not like you to miss, because it is worth doing.

And if you want more information, free courses and didactic material on trading and investing in financial markets, be sure to sign up for our Club BPT for free.