How to Do an Online Stock Buying Transaction

The days of the high power stockbrokers are history, as the World Wide Web has leveled the playing field, at least as far as investing goes. Previously, investors would have to call in a middleman, who would make a quick profits by having access to tools the average investor didn't. Now with online brokerage sites, anybody can conduct trades.

Things You'll Need

• Online brokerage account

Instructions

1. 

   Establish a brokerage account. Since most online brokers pretty much offer the same service, you should shop around to find the broker with the lowest per trade price. However, these companies often merge in tough economic times, so in the big picture, it really doesn't matter whose name is on top of the website, as long as the company offers a low per trade price.

2. 

   Stock your brokerage account with cash. Depending on what broker you use, you may have to deposit a minimum amount in order to open a brokerage account. You can either send checks via snail mail, or better yet, harness the power of the Web and link your bank account to your brokerage account, and transfer the money with a few keystrokes and mouse clicks.

3. 

   Research your stocks. You should already know about doing your homework before investing. Decide what stocks you want, at what price you want to buy, and what price you want to sell, if they go up.

4. 

   Decide how you're going to buy your stocks. If you're buying mainstream stocks, such as those sold on the major exchanges, then it's simply a matter of looking up the symbol and learning what exchange they're on. For more obscure exchanges and stocks, you may have to call an actual broker.

5. 

   Define how much you want to buy your stocks for. A market order will get you the stock at its price when you hit the "submit order" button in your browser. A limit order allows you to "set your price" -- so when the stock hits that number, your purchase automatically goes through. Limit orders can be valid for one day (known as a "day order") or "good until cancelled." Which method you choose is based on your financial savvy, market conditions and the companies you plan on investing in.

6. 

   Stay up to date on your stocks, as market conditions are in a constant state of flux.

Tips & Warnings

• The more DIY the online brokerage service is, the lower the fees. Learn what all the terms of investing mean before doing anything.

• Past performance is not a guarantee of future results.

Resources

• U.S. Securities and Exchange Commission
• Rukeyser.com