How to Buy & Sell Stocks Online
The advent of online brokerage accounts was one of the best money savers for stock traders. Before their popularity, the average trader often didn't have the money to purchase large amounts of stock, and the cost of brokerage fees for a live broker deterred their enthusiasm even more. Online brokerage accounts brought with them competition for your business and lower trading costs; they allow you to buy and sell stocks online inexpensively.
Other People Are Reading
Instructions
-
-
1
Open an online brokerage account. Most online brokers make it quite easy for you to open an account. Even though you have to give personal information, it's all protected through their systems and required by law. You'll need to have a social security number for the transaction. For ease of transfer in case of your premature death, use a TOD designation on the account ("transfer on death"). Be prepared with the date of birth, address and social security number of the person you named (see Resources below).
-
2
Investigate the stocks you think might do well. Before you buy and sell stock online, check the company's earnings, the price of the stock in relationship to those, and the past history of the stock. There are programs that help you make your selection (see Resources below). If you already have a stock in mind, still look up the history--don't put your investment money on the line until you investigate. Learn the symbol of the stock you want.
-
-
3
Pick the price you want to pay for the stock. Of course everyone wants to buy at the lowest possible price, but that's not always possible. Use a limit order or market order. A limit order buys the stock for a specific price or lower. A market order buys it for whatever price the stock sells for at the time of execution. If you use a limit order, sometimes you miss the purchase by pennies because the price remains higher. Occasionally, you'll pay a lot more than you intended if you use a market order. You often have other options like market on close, stop order that becomes a market order when the hits a specific price, stop limit that becomes an active limit order at a specific price or trailing stop that changes the price for fluctuations. Most beginners don't use anything but a market order or limit order.
-
4
Decide whether you want the order to stand until it's filled or just today. A day order is just for that day. If you have a limit order, you may not get the stock that day, so use the good until canceled section. This means that if the price drops before you cancel your order, you buy it at the price you specified.
-
5
Calculate the number of shares you want to purchase. If you're using a limit order because you only have a specific amount of money, don't forget to add in the cost of the trade to your total. Insert the number of shares to buy in the appropriate area.
-
6
Keep your stress at bay by ignoring the FOK and IOC. These stand for "fill or kill" and "immediate or cancel." Use "fill or kill" only if you need to have the entire order filled, and "immediate or cancel" if you want it done right away but don't need it filled entirely. Few beginning traders use these.
-
7
Press the "trade" button to buy the stock in your online brokerage account. If you want to sell the stock, remember that you just reverse the steps. This time the cost of the trade comes from the money from the sale, so don't worry about it.
-
1
Resources
- Photo Credit Stock.xchng
