Buying and Selling Stocks Online
Buying and selling stocks online is one of the best ways to keep your trading costs low. The costs of executing a stock trade online can be as much as 90 percent less than the price of the same trade at a full-service broker, with no reduction in the quality or the speed of the transaction. In order to get the most from your online trading, however, you need to shop around carefully for the best deal.
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Instructions
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Compare the costs of trades at several large discount brokerage firms. Some of the best known online brokers are E*Trade, Charles Schwab, Scottrade and TD Ameritrade. Check the fine print carefully when comparing the cost of trades—some brokerage firms offer their lowest prices only to customers with very high account balances, while others offer the same prices to all clients.
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Check the minimum balance requirements for each brokerage firm you are considering. Some firms impose maintenance fees on account holders who fail to maintain the required balance threshold.
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Complete the brokerage application for the firm of your choice. Depending on the firm, you might be able to complete the application online and transfer funds directly from your bank account. Be sure to complete all sections of the application, including your name, address, telephone number and Social Security number. You might also be asked to provide employment and salary information.
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Log on to your online brokerage account and check your cash balance. The cash balance should be shown on the "Accounts" section of the page. Be sure you have enough cash in your account to complete your trade.
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Enter the ticker symbol of the stock you wish to purchase, along with the number of shares you want to buy. Indicate whether you want to do a market order, where you buy the stock at the prevailing price, or a limit order, where you do not purchase the shares until they reach the price you set. Click the "Preview" button to review the trade and make sure the cash in your account will cover the cost. Click "Confirm" to send the order for processing.
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Set a selling price in your head when you buy the stock. Determine how much profit you want to make before you sell. Keep an eye on the price of the stock, then log back on to your online account and go to the trading menu.
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Enter the ticker symbol of the stock and the number of shares you wish to transact. Click the preview button to review the proceeds of the sale, then click confirm to send the order for processing.
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Keep a copy of your confirmation statement for tax purposes. You will need to report any capital gains you made on the stock to the IRS at tax time.
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References
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