There is a new trend in financial markets that is both surprising and refreshing. Yes, historically fewer ladies engage in stocks compared to men. Yet now, studies have shown that women are investing in stock markets more intelligently than men and in increasing numbers. So how can we make it easier for women to get started and succeed in stock markets?
Even if this is all new to you, don’t worry. The truth of the matter is that women possess characteristics that that help them succeed. For starters, we’re more averse to risk than men: unsurprisingly. Today, look beyond the risks involved in this business and make calculated trades. What makes women particularly good at trading is they’re exercising risk awareness once they invest their money.
This is very much unlike men. Men take higher risks; this is at times to their detriment. Ladies tend to generate better results because they tend to be patient and trade less often. So, without more chatter on how incredible we can be, let’s get started in…
What is the Stock Market?
Simply put, the stock market can be likened to a supermarket where you are allowed to buy parts of companies you are interested in. It can also be compared to a market place, where the price of an item (in our case a share) is worth a certain amount a buyer will pay for (think like eBay).
If the demand of the item goes up, the price of that item also goes up. Think of this as an in-demand fashion trend that isn’t in all retail stores yet. You’ll get those really wanting to sell it online at an increasingly higher price. Likewise, if the demand of the item goes down (as it is out of trend), people will start to sell, the price goes down.
The Process of Buying Stocks
In practise, for you to invest in stocks you need to open an investment account. Using an online brokerage account is the quickest and cheapest way to purchasing stocks. It is important for prospective investors to evaluate their brokers in terms of account fees and trading commissions. To save you hunting, you can find a summary on the best online brokers here.
Investment can also be done through robo-advisors. Think of this like going to make-up counter and getting an automatic recommendation on products to match your skin, complexion and desired look. The only difference is being robo-it is machine driven to be more accurate and cheaper than human management. The service will ask questions in regards to your investment goals and build you a portfolio designed to realise those goals.
Getting Started In The Stock Market
Ladies, stock investing is not as complicated as it appears, at the start you only really have two options:
- mutual funds or
- individual stocks
A mutual fund is like a collection of make-up products that go well together based on the look you want to achieve.
An individual stock is like buying a single lip stick or eye liner. You know exactly what you want.
Each make-up collections suit a certain type of skin complexion and style. Mutual funds also suit different investment styles.
Different make-up collections and mutual funds can be used together.
This is a group of stocks (a group of companies). Think of it as a bundle that is recommended together. A handful of make-up products that go great together.
Stock Mutual Funds are also known as exchange –traded funds. Mutual funds let investors buy small pieces of many types of stocks. Normally, the purchase is done in a single transaction. Exchange-traded funds and index funds are a type of mutual funds that index and track stocks.
You’re are allowed to put several funds together so as to diversify your portfolio. Stock mutual funds are also known as equity mutual funds.
If you know what single make-up product you want, you just buy that. You don’t need a collection, just that single lipstick or eye liner.
This kind of investment is ideal for those looking to invest in a particular company. You can buy the number of stocks you are interested in; creating a diversified portfolio out of this kind of investment is possible. It requires you to make a significant investment.
Pros and Cons
If you don’t know exactly what you want and want to give yourself better coverage, stock mutual funds are advantageous because they are diversified inherently. This mitigates your risk. Their downside is that they are not likely to rise in a dramatic fashion as individual stocks might.
The best thing about individual stock is that a wise pick could will comfortably outperform mutual funds. A wrong pick could see your portfolio slide significantly in value.
Ladies, knowing this is key to making a good start in the stock market.
Mutual funds are not completely hands-off: you need to stay on top of your investment portfolio. This is because you might need to rebalance once in a while, check fees and checking to see if you are invested at an appropriate level of risk.
Those who do not want to actively participate in the market may be good candidates for a robo-advisor. This is an online portfolio management service that invests and rebalances their portfolios it may be required.
Trading Stocks In The Market
Whereas investing doesn’t take much time to manage, the timeframe to wealth is often decades. Knowing the difference is vital when looking to get started in the stock market as they have very different behaviours. Trading and investing isn’t the same.
Alternatively, trading on the other hand looks to build money quickly through actively trying to beat the market. Traders are not interested in long term uptrends in financial markets. They look for short-term moves that make them profit in both a failing and raising markets.
Trading Styles and Durations
The time can vary from seconds to years depending on a trader’s style. There are four basic trading styles; swing, scalp, position and day.
If position trading is like a classic black dress that lasts for years.
And swing trading is a seasonal look you’ll have for a few months.
And day trading is an outfit you’ll wear for a one-off occasion.
Then scalp trading is borrow your bestie’s clothes and giving them straight back, over and over again.
This is like buying a classic black dress. You know you’ll have it for years to come. You back its value and use to you.
Position Trading has the longest time frame of trading techniques. Position traders use a combination of fundamental analysis and technical analysis. Normally, short-term price fluctuations are ignored in favour of profiting and identifying from long term trends. Sometimes these can even appear like individual stock investments and not trades.
So, think of this as a seasonal outfit. You’ll get loads of wear out of it for a few months, but then the time is passed, and you’ll move onto something else.
In this style, positions are held for weeks or even months in a bid to capture short-term moves in the market. This style of trading does not require constant monitoring because due to the longer timescale of trades. Support and resistance levels are often used to determine entries and exits.
An outfit you know that you’ll wear only once.
Therefore, in this style of trading, your positions are exited and entered on the very same day. Having good time availability is vital to making this style work for you. Day trading requires close monitoring of the market and traders need to be aware of any kind of interruptions or trading platform issue.
Like borrowing your bestie’s clothes and giving them straight back, over and over again.
Scalping requires constant time online, involving frequent selling and buying through a trading session.
Investment Asset Classes
Shoes, handbags, make-up and clothing are all different types of fashion items you can buy. Each of these is effectively a different class.
Financial asset classes are grouped because they have the same characteristics. Regardless of make, colour or style, shoes all have a sole, and inner and an upper. And, they all behaviour in a similar way. You put your foot in them, when you walk they bend and when it rains you’re more likely to slip.
Likewise, each asset classes behaves in a similar way in the market.
Plus, some are riskier like walking in heels than a safe everyday shoe. Within asset classes some are riskier than others!
An example of different asset classes includes;
Want to get started trading in the stock market?
What to know more on how to get started in the stock market? If you’re interested in learning more about trading, get started with our Free 7-days to Trading Course.