The stock market is appealing even to college students. The fact that a college student can be able to make an extra dime through stock trading is a more than welcome thought. For thus reasons, college students are always on the lookout. They are desperate to find viable investing opportunities that can help them earn that extra dollar. What is even more intriguing about stock trading in general is that one gets to earn without necessarily working themselves out.
Since some college students approach the stock market with rather unrealistic expectations, it ends up working against them. It is best for one to have a good understanding of the market and the risks involved before tossing themselves into the market. The last thing you want to do is to approach the stock market prematurely.
Perhaps the best way to approach the market is to begin by understanding the basic principles of the market operation.
Basic principles of investing in the stock market for college students
As a college student, you need to familiarise yourself with these 3 principles if you want to succeed at online share trading.
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1. Remember to always invest with a margin of safety
In a stock’s perspective, investing with a margin of safety basically means buying stocks at a discounted price. One needs to buy stocks at a price that is lower than its intrinsic value. This is important as it guarantees profit once the stock is traded.
2. Always anticipate market volatility
When getting started on the stock market as a college student, you need to understand that the market is very volatile therefore you need to have zeal to withstand all the risk factors. Do not walk away once you are greeted by a market downturn. Use the opportunity to make smart investment decisions such as finding great investments.
3. Understand the kind of investor you are
Take time to find out whether you are an active investor or a passive one. This will help you know how to go about the market.
After understanding these basic principles, you need to know how to approach the market.
The do’s and don’ts
As an inexperienced investor in a world dominated by seasoned investors, you are advised to do the following;
- Make contacts with seasoned players – As a young investor, it is important to note that one key area that can determine your success in the stock market is research. It helps you understand the market trends and know exactly how to approach them. Besides just reading these trends on books and the internet, you may want to contact an experienced trader for help.
- Stay informed – Constantly familiarise yourself with the stock market and their prices so that you can be able to know which shares are trading well.
With that, you may want to avoid expecting instant results as it may take a while before you can start reaping benefits.