Every person who wants to invest in stocks requires a certain set of pre-requisite skills and mindset to begin his or her venture. This can vary from the kind of approach to take all the way to understand the basics behind investment in stocks. Listed below are some important tips and suggestions that can help a person acquire the skill set needed to invest in stocks.

Learning fundamental concepts
This is the most important tip for aspiring stock investors. Before investing for the first time, it is advisable to comprehend the following terms that can be useful in understanding the stock market.

• Financial Metrics
  P/E Ratio, Earnings per Share (EPS), Compound Annual Growth Rate (CAGR) and Rate on Equity (ROE): these terms can be used to understand the financial performance of a company, how much returns they can yield and can be used to compare two companies against each other to choose which to invest in.
• Choosing Stocks
  Broadly, the two forms of analysis of stocks are “fundamental” analysis and “technical” analysis. Understanding the mechanisms of these forms of analysis and whether they vary from one and another is key to helping beginners in stock management.
• Forms and Types of Orders
  Having a strong conceptual understanding with respect to market orders, stop market orders, limit order, trailing stop-loss orders, stop-limit orders and other terms can go a long way in helping a beginner gauge what other long time investors are conversing about.
• Types of Accounts
  These include cash accounts and margin accounts. Cash accounts are most prevalent. However, in order to comply with certain forms of trade, margin accounts are mandated by law and it will prove to be extremely beneficial to understand how these work as well.

Determining Goals as per Needs
For a person interested in investing stocks, he or she must first identify why they want to invest in stocks. Although the intention may be seen to be initially inconsequential, it does help in understanding how soon a person needs returns on investment. People invest for various reasons. They might need returns within half a year to make a purchase. Some of them might be saving for retirement, college expenses of their loved ones and even a fund for beneficiaries under unfavorable circumstances. This helps people understand how much they want to invest and what type of investments to make depending on when they can take back their returns.

Understanding the Risks Involved
When an investor embarks on his journey with the stock market, determining how much risk he or she wants to take in investing is very tricky. Riskier investments yield higher returns. However, investments with high risks also have a good chance of resulting in losses. It is imperative for a person to understand whether or not he or she is willing to take high risks. This helps a person become mentally prepared for incurring losses when high risks are taken by understanding the magnitude of the risk taken. It also helps people who are risk-averse from unnecessary anxiety worry in making investments with high risk.

These tips are important for novice and amateur stock investors so that the foundations of their investments and work processes are strong.