How to Start Investing in the Stock Market

You will first need to set up an account with a brokerage firm. Then you will need to determine how much money you have to invest. And lastly, you will need to decide on a trading system for a systematic approach to investing.

• Full Service Brokers

  Full service brokers will make recommendations on what to buy. However, the individual brokers are limited to what they can recommend based largely on the firm’s research recommendations. They are unable to sell you a no-load mutual fund. They sell only loaded funds that carry a large front end commission or large commission when you sell. You can develop an on-going relationship with a full service broker since you will be placing all of your trades that broker. The commissions at full service brokerage firms are significantly higher than those at a discount broker. Full service brokers include: Smith Barney, Merrill Lynch, and A.G. Edwards.

• Discount Brokers

  With a discount broker you make your own buy and sell decisions. You will be free to buy no-load mutual funds, individual stocks, and exchange traded funds. The commissions will be significantly lower that the commissions at a full service broker. While you can place your trades by telephone, you will find it much more convenient to place your trades on the discount broker’s trading platform. These trading platforms are user friendly and facilitate the trading process. You can download the necessary forms to open an account and wire transfer your money to your new account. Unless you feel you need “hand holding” and are willing to pay higher commissions, I recommend you consider trading with a discount broker. Discount brokers include: T.D. Ameritrade, Charles Schwab, and Scottrade.

• Auto-Trade Broker

  If are unable or not interested in placing your own trades, an Auto-Trade Broker is a good alternative. Your commission charges will be a bit higher that with a discount broker but you will not have to check your email each evening and place your own trades. The Auto-Trade Broker gets the trading signals at the same time as the subscriber and places the trades on the behalf of the subscriber. You can always see the value of your portfolio as well as the individual holdings on the Auto-Trader’s trading platform. For those who never want to miss a trade and not have to worry about placing the individual trades, an auto-trade broker is a good alternative.

• Minimum Account Size

  If you are just getting started with investing in the stock market, you could purchase an ETF or no-load mutual fund with as little as $1,000 to $2,500. However this would not give you much diversification. To effectively trade my trading systems, I recommend a minimum investment of $5,000 in each investment. That would equate to a minimum portfolio sized of $25,000 to $35,000 depending on which system you decide to trade. These systems could be traded with half that amount but the commission charges as a percent to the total portfolio value will naturally be higher.

• Trading Systems for Success in Stock Market Investing

  
  Click below to learn more about how our trading systems can help you to invest successfully in the stock market:

Mutual Funds Trading System

Exchange Traded Funds ETF

Rebound High Five