How to Buy American Stocks
The U.S. stock market is the largest in the world as measured by market capitalization, and investors and traders can choose from thousands of different stocks. To start buying stocks in American companies, you need an account with a stock broker. If you like to do your own research and want to pick the stocks you buy, an online brokerage account provides the lowest commissions and near-instant feedback on your trade prices and current stock values.
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Instructions
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Open an account with an online stock brokerage company. You will need you Social Security number and employer information as well as the usual name and address. The application process can be completed and approved onlilne. Linked in the Resource section is the Smart Money magazine 2009 Broker Survey. The article lists E-Trade, Fidelity and Charles Schwab as the top online brokers for individual investors. There are 17 other online brokers covered in the survey with their strengths, weaknesses and commission rates.
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Fund your brokerage account with the money you want to invest in stocks. There are three ways to send money into a brokerage account: wire transfer, electronic ACH transfer and mailing a check. Wire transfer is fastest, but there is a cost. ACH transfers are free, but take several days to get set up.
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Become familiar with the account, price quote and order entry screens of your online brokerage account. The account screen will show the stocks you own and the cash available for investment. The price quote area will give the current price of stocks you may want to buy or research. The order entry screen is where you place the order to buy stocks.
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Select the first stock you want to buy and the number of shares. Orders are entered by the stock symbol and number of shares. The cost will be determined by the share price when the order is filled and the brokerage commission.
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Place an order for the stock using the online order entry screen of the online broker. If you place a "market" order, the purchase will be completed almost immediately at the current market ask price. A limit order allows you to set a specific price for the stock, and the order will be filled when the stock price reaches that level.
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Tips & Warnings
Buying stocks is relatively easy. Picking the right stocks for your investment goals takes research and understanding the business behind the stock.
Do not pick a broker on commission rates alone. The better brokers provide extensive tools and research reports to help you select investments.
The SEC provides guidelines to protect your personal information when using an online brokerage account. Your computer should have a firewall, the broker should have extra password protection features, and you should only access your account from your home computer.
Stock investing can result in significant losses. It is important to understand the risks and do your own research before investing in any stock.
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- Photo Credit Stock Market image by Paul Heasman from Fotolia.com
