Stock Trading for Beginners [2025]: A Guide to Purchasing Stocks

In this guide, we will look at stock trading for beginners, delving into how to buy stocks, sell them, and analyze many of the features used when trading. In addition, we’ll go over:

• Stock-buying methods;
• Avoiding common stock trading mistakes;
• Selecting a suitable brokerage;
• What to look for when researching a stock;
• Budgeting;
• Executing trades;
• Portfolio-building recommendations and much more.

Best Crypto Exchange for Intermediate Traders and Investors

Invest in cryptocurrencies and 3,000+ other assets including stocks and precious metals.

0% commission on stocks – buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.

Copy top-performing traders in real time, automatically.

eToro USA is registered with FINRA for securities trading.

30+ million Users worldwide

Get Started

eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.

Nowadays, investing in stocks doesn’t have to take place on the New York Stock Exchange (NYSE) floor; you can do it online from the comfort of your couch on your phone. However, despite the ease of buying a stock in this day and age, it’s crucial to be well-versed in what you’re doing.

For this reason, we’ll take away the intimidating side of trading and teach you how to get started showing you how to trade stocks in order to optimize your profits while reducing your costs. Lastly, this guide will primarily focus on investing in actual stocks (buying and selling the underlying asset) instead of derivative financial instruments such as contract for differences (CFDs).

Beginners’ corner:

• What is Investing? Putting Money to Work
• 17 Common Investing Mistakes to Avoid
• 15 Top-Rated Investment Books of All Time
• How to Buy Stocks? Complete Beginner’s Guide
• 10 Best Stock Trading Books for Beginners
• 6 Basic Rules of Investing
• Dividend Investing for Beginners
• 5 Passive Income Investment Ideas

The opposite of spending money in the present is investing. It saves money for the future in the expectation that it will grow over time, but it also carries the risk of losing money, which is why it’s important to utilize all of the tools at your disposal when you invest.

One such investment vehicle is stock trading (investing in stocks or buying stocks). Stock trading definition is buying and selling shares in companies to make money from price fluctuations — traders monitor these price changes closely, intending to buy low and sell high, and in the process, make a profit.

The notion with investing is that money or capital is invested with the hope of growing your money over time; this is done by putting money to work in one or more types of investment vehicles.

Starting your investment journey early, particularly with stocks, offers the potential to grow your wealth and stay ahead of inflation. Over time, as you progress towards your financial goals, you can transition from stocks to the relative safety of bonds. This gradual shift helps balance your portfolio, maintaining growth while reducing risk as you near your target.

The easiest and most common approach for beginning investors to get exposure to stocks is through the stock market. Investing in stocks is simply purchasing small shares of ownership in a publicly-traded company.

By investing in these modest shares, you’re hoping that the firm will grow and prosper in the long run, which is the aim. As a result of the company’s growth, in the future, other investors may be willing to pay more for your shares, and if you decide to sell them, you’ll be able to make a healthy return.

If you’re interested in learning more about putting your money to work be sure to check our two essential guides on the best investment books and stock trading books of all time. Alternatively, read our guide explaining what is investing to know where to start.

An inexperienced investor is prone to making costly errors due to overconfidence, impatience, or even naiveté. However, these blunders may be quite expensive; therefore, learning how to avoid them is highly recommended.

Before you begin investing, it is essential to obtain some knowledge in order to maximize your profits and minimize your losses. After reading this guide, you’ll have a better sense of the mindset you’ll need, the expectations you may have, and the techniques that will be most effective. Here’re the most common investing mistakes made by novice stock traders:

• Expect to get rich overnight: It is unrealistic for newcomers to expect to see significant increases in their portfolios overnight, although this sometimes happens in the stock market.
• Lack of time spent for Technical and Fundamental analysis: It is more likely that you will wind up as a gambler rather than a trader if you do not have the proper research mindset in place. In order to make an informed investment decision on any company, you must first understand how the firm makes money, what its competitive advantages and risks are, how fiscally sound the company is and how promising its future appears to be.
• Not having a proper trading plan: Plan your trade – trade your plan. Professional traders have their set up position with entry, exit, and stop losses set in mind before entering a trade and executing it. Unabated enthusiasm and even greed will drive far too many novice investors (and many seasoned investors, as well) to purchase shares of businesses, with little consideration given to whether the stocks are undervalued or overvalued.
• Following the wrong sources: For many new investors, it’s easy to place their trust in financial TV experts, YouTube tips or stock picks from a friend or colleague. Anyone may recommend a stock, but you seldom know the recommender’s track record – and even the best investors make mistakes from time to time; hence, in the long term, it’s highly advisable to learn the stock trading ‘magic’ yourself.
• Buying Penny Stocks: Traders may purchase penny stocks for as little as $5, with many of them trading for as little as $1. For new traders, the appeal is that you can get a lot of shares for not much money. However, it is common for these stocks to sink to zero, and just a handful soar. It’s also worth noting that unprofitable businesses may easily be manipulated by scammers hype up online “pump-and-dump” in schemes.
• Not diversifying: Not diversifying enough is another common investing mistake. Owning ten energy companies and ten electric vehicle (EV) companies is not diversification. A drop in the price of oil or gas could change the fortunes of half your portfolio, as could chip shortage that could put factory production on hold. By investing in a range of industries and a range of countries, you can mitigate the risk.
• FOMO and buying stocks at all-time highs: Purchasing shares at a downturn in the market may result in significant gains in the future. It is better to avoid succumbing to the fear of missing out (FOMO) and buying shares at all-time highs. At times, exercising restraint