HOW TO BUY SHARES – LEARN HOW TO GET INTO ONLINE STOCK TRADING

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Updated: 10 March 2020

Investing in stocks can be a useful way to make money. When you discover how to buy shares – learn how to get into online stock trading, it is possible to invest from the comfort of your home or even on your mobile device. To make a profit and succeed, you must understand the market and strategies, as well as basic terminology. Learning how to buy stocks can be a useful investment tool for the average person, but it’s not right for everyone. You must be willing to put in time to research potential companies before making trades

  • Understand stock order types
  • Do your research on stocks and shares
  • Choosing a broker
  • How to actually buy shares

CONFIRM BUYING SHARES IS RIGHT FOR YOU

If you are not willing to dedicate a great deal of time to research potential profits before making trades stock trading might not be for you. It is easy to lose money by investing in shares. With time and effort, however, you can not only learn how to get into stocks but also make a profit doing so.

Buying shares can appeal to a wide range of people. Those who have free time and an interest in businesses and the stock market may see this as an opportunity to supplement their regular income. A key factor to consider before buying shares is whether you truly have the time to spend actively watching positions and the markets. Otherwise, you might want to consider an alternative, such as an investment portfolio or index or mutual funds instead of individual stocks.

The good news is that everyone can discover how to buy stock online and begin trading. The level of capital allocated plays a role in the trading strategy adopted. The good news is that there brokers out there that offer accounts with an initial deposit as little as $100 with some brokers offering the ability to leverage your investment that acts to increase the level of risk attached to your strategy.

HOW TO BUY SHARES

UNDERSTAND THE TYPES OF ORDERS

Each type of order for stock investments has its own purpose in a sound trading strategy.

Market and limit orders are the two most common and, therefore, the most important to understand. Market orders are orders to sell or buy right away at the best price available. This type of order will not guarantee a price, only the immediate execution of the order. Limit orders require setting a minimum or maximum price to sell or buy at. The order is only executed when the stock in question can be sold or bought within your specified price. This type of order might take a long time to execute or never be executed.

Stop orders are also known as on-stop sell, on-stop buy, stopped market, and stop loss orders. While market and limit orders become active as soon as you enter them, stop orders stay dormant until your specified price has passed. Then, they activate in the form of a market order. This type of order can be used once a position is opened to limit the loses. For example, you have bought a stock at $100 and you have agreed that for this particular investment the maximum loss you are willing to incur is $20. Therefore, you will enter a stop sell (stop loss order) at $80. ,Similarly a take profit order can be entered at a higher price than the acquisition that would automatically sell the stock and mark the profit.

All or none orders (fill or kill) are typically used for stocks with low liquidity and require that your entire order is executed, or it does not get executed at all.

Finally, good ‘til cancelled orders stay active until you choose to cancel them. If you place a GTC order without specifying the time frame, it will typically expire at the end of the day.

USE EDUCATIONAL RESOURCES TO UNDERSTAND THE MARKET

Before you begin investing, take advantage of resources showing how to buy shares – learn how to get into online stock trading. There is a wealth of information online, including in guides like this one. The broker you choose to work with will also likely have vast educational resources on its website. This can include e-books introducing the process and strategies for buying stocks, video tutorials, glossaries, courses, webinars, and more.

In addition to numerous e-books from brokers and investment strategists, you can head to your library or bookstore and find a physical book on stock trading. Because of the popularity of this revenue stream, there are dozens of books with slightly different focuses. Your library likely has at least several books on this topic. If you prefer not to read an entire book, you can also find articles on financial- and investment-related websites.

Even in the age of the internet, traditional methods of learning about the stock market are not gone. You can find seminars and classes in your local area designed to teach you how to buy stocks. Because we live in the digital age, there are also numerous online courses, workshops, and webinars, including from top brokers where you may open an account.

FOLLOW THE MARKET VIA PROFESSIONAL SOURCES

To get a better feel for how to buy shares, you must take the time to follow the market. As you gain skill, you can look at it yourself and develop your own analysis. In the meantime, turn to professionals for assistance with this. To get a good idea of the market as a whole, make it a habit to read the finance section of your favourite newspaper each day. At the very least, read the headline stories and take the time to review Google Finance and Yahoo Finance.

Visual learners can also opt for videos. Most major news stations have at least several minutes of stock market coverage every hour, at a more or less a set time. There are also investment gurus who regularly upload market analyses, either daily or weekly on video platforms, their own websites, or social media. Those interested in learning to trade stocks online would do well to begin paying attention to the market as early as possible. This gives you more time to become familiar with the jargon, learn strategies, and discover which professional analyses are worth paying attention to and which you should ignore. If you want, you can also get a subscription service with daily market analyses. Before going this route, however, do your research on the service to confirm it is from a respectable trader with real market insights instead of a scam artist looking to take advantage of investment newcomers.

SELECT AN ONLINE BROKER TO WORK WITH

The next step in how to buy shares – learn how to get into online stock trading would be choosing the online broker that you wish to use. Everyone will have a slightly different preference for brokers and there are hundreds available, each with their own pros and cons and ideal targets. As a beginner, you will want to select a broker that has low trade minimums, so you can start your investments small and minimize risk. You also want top-notch customer support and vast educational resources, as these can help guide you through the investment process.

Do not forget to examine the software the trading platform that the broker offers. As a beginner, you need something that is simple to navigate and streamlined. You can consider a broker with an optional advanced platform for when you gain experience. The typical new investor will not have too many trades, so the commissions per trade will not be as important at first. However, if you do not want to switch brokers in future, make low commissions a priority, as well. You might also want to pay attention to monthly account fees, which some brokers will charge, and others will not.

TAKE ADVANTAGE OF THE DEMO ACCOUNT OR A SIMULATOR

Before you start trading with real money, take the time to hone your skills with a virtual account. Many brokers offer a free, risk-free demo account, sometimes called a practice account. These accounts can show you how to buy stock online and use the broker’s platform without risking any real money. They typically have nearly identical conditions to that of the market as well as almost identical functionality as the broker’s actual platform.

If your chosen broker does not offer a demo account or you are dissatisfied with it for some reason, there are also numerous third-party websites with their own stock simulators. These are also risk-free and ideal for developing the skills necessary for how to get into stocks. The simulators are typically completely free to sign up for and come from reputable websites you can trust, such as financial authorities. Those unsure of which stock simulator to choose read the reviews. There are dozens of excellent choices, as well as hundreds of other options that will still give you the necessary experience, albeit with fewer tools or similarity to actual trading. The simplest method will always be to check if your chosen broker offers a simulator as you already have an account. However, creating an account with a reputable third-party stock simulator should only take few minutes.

Online Stock Trading

COMPLETE YOUR OWN STOCK MARKET RESEARCH

At this point, you are almost done learning how to buy shares. Now is the time to put your knowledge to good use by conducting your own research on the stock market. Before buying and selling a company, you should thoroughly analyse the business in question. Examine its public information, such as earnings reports, SEC reports, and financial filings. Supplement your own research with that of professionals with experience in stock trading.

Complement the fundamental research with technical analysis that covers the price movement. Depending on the type frame of your trade put more weight on one or the other. If you are looking for a short time frame the technical analysis performed on the stock price should weight more than the fundamental one. Remember the trend is your friend and that you do not need to buy at the lowest price and sell at the highest price, capturing the middle of the trend would be good for you.

Remember to invest in stocks of businesses you understand. There is not a point in chasing returns generated by stocks of businesses you do not know how are they run or are in a sector you do not understand.

When you choose to invest, a good rule of thumb is to start small. If you go straight from learning how to buy stock online to investing thousands of dollars, you will have no time to hone your skills. Begin with quantities you would not mind losing, even if that means buying only a few shares of a stock. Remember that once you feel confident in your trading skills, you can start investing more to increase your potential returns.

Remember to create a plan, a set of rules to follow. Without having a strategy and following it you might be doomed to lose you hard earned money. Enter a trade with a clear price target and always establish how much are you willing to lose and protect your capital by using a stop loss order. You should always aim for gains that are at least 2 to 1 to the amount you are willing to lose on that trade. Also, it is important to establish how much you allocate to each stock you are trading. Remember that things can go against your position and therefore having all the money tied in one trade might not be the right decision. If the decision is to invest in several stocks in the same time, select a number of stocks that you know you can follow. Use the demo account to perfect your trading strategy and get confident before starting to trade.

BEGIN BUYING AND SELLING SHARES

Once you feel reasonably confident in your trading skills and knowledge, you can put your lessons on how to buy stocks to good use and begin your investment strategy. Every broker will have a slightly different process for actually buying and selling stocks and shares, but the process is always reasonably similar. Begin by logging into your account and ensuring you have made the minimum deposit.

Before placing a trade consult the broker tutorials that would guide you through the process. Usually the order execution process is relatively easy with a few number of clicks and is designed having in mind the speed of execution. Usually an order page will ask you to fill the ticker of the company you want to buy, the number of shares you want to buy, the type of order (market or limit), the validity of your order (day or good till cancelled). Some platforms will also allow to introduce in the same time the take profit or the stop loss order.

CONCLUSION: BEGINNING TO TRADE STOCKS

Figuring out how to buy shares – learn how to get into online stock trading can be an excellent tool for those looking to expand their income stream in their free time. While making a consistent profit requires a great deal of effort, there are numerous tools available to assist with discovering how to get into stocks. Between educational resources on individual broker websites and third parties, market analyses, online and in-person courses and workshops, and stock simulator accounts, there are more than enough resources available to help beginners enter the world of stock trading.

By following the above steps and taking the time to learn terms and understand the market before making any major investments, you should be able to set yourself up for success. The key is to take your time and start with small investments as you get your footing with this strategy to minimize risk. Additionally, traders should continually look for more educational resources and expert advice to enhance their strategies; there is always room for growth when investing in shares.