How to Do Stock Market Trades on the Internet

Buy and sell stocks with an Internet brokerage account.

For many investors, trading stocks over the Internet is the way to go. The Internet provides up to the second pricing, and trades placed online incur very low broker commissions. Online stock trading can be used by buy-and-hold investors as well as day traders. The secret to successful Internet stock trading is researching the stocks and having an investment plan.

Instructions

1. Open a stock trading account with one of the online brokerage companies. They will allow you to complete the application through their websites and get set up for trading. Linked below is the Smart Money magazine 2009 Broker Survey. The top-rated online brokers in the survey were E-Trade, Fidelity and Charles Schwab.

2. Fund your account. The brokers will have a minimum initial deposit of $500 to $1,000. Trading stocks on margin requires at least $2,000, and day traders must have $25,000 in their brokerage accounts. Money can be deposited in a brokerage account by wire transfer, electronic bank transfer or by mailing a check.

3. Become familiar with your online account order-entry screen. This screen is where you place buy and sell orders. There will be fields for the stock symbol, number of shares, market or limit order, and time frame. For limit orders, you need to enter the limit price. The online account will have different screens for trading stocks, ETFs, mutual funds and bonds.

4. Determine the stocks you want to trade and the number of shares to buy or sell for each stock. Your stock trading will start with buying some shares. Traditionally, stocks are bought and sold in 100-share blocks, but online trading will allow you to buy and sell shares in any amount.

5. Place your stock trades using the order screen. After entering the trade data, you will be required to confirm the trade information before completing the trade. Make sure the trade is pending after you place the order. Your main account screen will show the stocks you own and your pending trades.

Tips & Warnings

• Many online stock brokers offer practice trading accounts. If you are new to stock trading, spend some time with the practice account to test your strategies and learn how the broker's system works.

• Double- and triple-check your orders before finally sending them in. It is not good to buy IBM at $120 per share when you wanted by buy IBN at $40 per share.

• Internet stock trading does not come with any investment advice. You must do your own research or find an advisory service you trust.

• It is possible to lose significant amounts of money trading stocks. You should understand the risks involved before attempting to trade stocks.

References

• Trading Patterns: Stock Market Order
• E-Trade: Help Center: Trade Stocks

Resources

• Smart Money: 2009 Broker Survey