One feature of the stock market is that it is a deep mystery to those who are not familiar with how it works. A lot of people out there would like to invest in the stock market. But since they don't know exactly how the stock market works, they simply can't make that first move.

If this is true - and it is - it follows that the first step in stock market investment is simply to get informed. Before you stake your hard-earned money, get all the information that you can about the stock exchange. Read books and magazines on the subject. Ask your friends who are knowledgeable on the subject and follow the business news for a while. With some basic information at your finger tips, you are now ready for the next step.

Register with a stockbroker. But don't buy any stocks yet. Just deposit some cash with your broker and tell him or her to await further instruction from you. Don't be in a hurry to buy stocks. Just carry out a dummy trading first.

Select certain stocks, at least six, from different industries. Monitor these stocks for a period of say, six months and watch how "they behave". Did the prices rise? Did the prices fall? Was it a mixed-bag of price appreciation in some cases and price reduction in other cases? Now, you have learnt some of the "inside tips" that stockbrokers claim to have.

You are now ready for the next step. Ask your stockbroker to recommend some stocks for you to buy. Don't say anything about the dummy trading that you did. Don't let him/her know that you have some inside knowledge already. Compare his "expert" recommendations to some of your own observations when you were dummy trading. If his recommendation is spot on, go ahead and buy. But don't buy a large volume in anyone stock. More to the point don't invest any cash that you may need to use soon.

Again, don't ever buy stocks with borrowed money. Investing in the stock market is a long term investment. You put your cash into the stock and wait. After a while you discover that your investment has really appreciated. You sell and you re-reinvest.

By now, you have gotten the hang of it. So, you can go ahead and set aside a monthly sum of money for stock market investments. Five percent of your monthly salary will do for a start. With luck on your side, you will see a great return for your investment after a while.

Warnings:

- Don't always listen to advice but act based on your own research and your intuition.

- Don't rush to sell as soon as prices begin to drop. The prices may rise later on.

- Be careful with new stocks. They are full of risk.

- Buy only tried and tested stocks.

- Don't buy stocks because other people are buying them.

- Have an exit date for each stock you buy.

- Don't be greedy.

- Aim for a tidy project and chill.

These are the basics on how to start investing in the stock market.

Learn more about this author, Emmanuel Osondu.
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