How to Buy & Sell Stocks Step by Step
The process of buying and selling shares of stocks can be accomplished entirely over the Internet. Investing in stocks offers investors the opportunity to profit from the market price gains of stocks and to earn dividends from the stocks. Successful stock investing requires extensive research into the stocks selected. Start investing by buying a small amount of stocks that interest you and learn how the process works.
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Instructions
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Open an account with an online discount stock broker. Online brokers let you do almost everything necessary to buy and sell stocks over the Internet including opening an account. Smart Money magazine publishes an annual ranking of the top online brokers.
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Fund your brokerage account with your initial stock investment money. The online brokers allow you to send money to your account by wire transfer, electronic ACH deposit or a mailed check. The account application section of the broker's website will provide directions to send in money. Wire transfer is the fastest way to send money, but there are costs on both ends.
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Select the first stock or stocks you would like to buy. Make a note of the stock symbol for your selected stocks. Stock research is the most important part of successful investing, so make sure you understand the companies behind the stocks. Stable, blue chip companies like Coca Cola, McDonald's and Walmart might be good investments for a new stock investor.
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Look up the share price of a stock you want to buy using the broker's website stock quote screen. Enter the stock symbol and you will get the current price for the shares.
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Calculate the number of shares of the stock you want to buy. Divide your investment amount by the current share price. Most stock brokers only allow purchase in whole share increments so round your result down to the next whole share.
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Enter your stock purchase information in the stock trading screen of your online brokerage account. You can find the trade screen by using the website menu or click on the "Trade" link next to the stock price you have looked up. The trade screen requires the stock symbol and number of shares you want to purchase.
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Place the order to complete your stock purchase by selecting "buy" and "market order." The screen will have a button to complete the trade and you may have to enter your trading password. A market order will be filled almost immediately at the current market price.
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Check your account summary screen to ensure the stock trade went through and check the price for your trade. The account summary screen will show the current value of your stock investments and how much cash you have available to buy stocks.
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Sell stocks by using the same process and stock trade screen as for buying stock. Remember to select "sell" in the order screen before completing the order. You can go directly to the trade screen with the boxes filled in by selecting "trade" next to the stock position in your account summary screen.
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Tips & Warnings
Online brokers charge a commission each time you buy or sell stock. Discount brokers charge $5 to $10 for a stock trade.
Market orders are filled at the current market price. To buy or sell at a different price than the current price use limit orders on the trade screen. A limit order will be filled when the stock reaches the limit price.
You can buy any number of stock shares. If your calculation shows 10 shares, you can place the order for 10 shares.
It is possible to lose a significant portion of your invested money buying and selling stocks. Do your own research and understand the risks before buying any stock.
References
Resources
- Photo Credit chart background image by Stasys Eidiejus from Fotolia.com
