How to Trade American Stocks
People have many options when deciding to invest. One of the most common investment options is stock. Investing in stocks requires the purchase and sale of shares of stock, a process known as trading. Trading stock results in a positive or negative effect on personal finances, depending on the purchase and sale price. Most American stocks trade on a stock market exchange. The three most common American stock market exchanges are the New York Stock Exchange, Nasdaq and the American Stock Exchange. Trading American stocks requires setting up a brokerage account to access these exchanges.
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Instructions
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Establish an online brokerage account. Many companies in the United States provide online brokerage services; some of the most common include E*Trade, Charles Schwab, Scottrade and Vanguard. Visit an online broker's website to establish a new account. Provide the requested information, including your Social Security number, income level, name, address and date of birth.
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Fund the online brokerage account. Mail a check or perform an electronic funds transfer to deposit money into your online brokerage account. Most brokers require minimum account levels.
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Research a stock that interests you. Determine the current stock price, expected performance and projections for growth. Utilize research from your online broker, newspapers, magazines, company presentations and company filings.
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Calculate the number of shares you would like to buy or sell. Divide the dollar amount you wish to invest by the current stock price to calculate the number of shares to purchase. Round down to the nearest whole number. Alternatively, determine the number of shares from those you already own to sell.
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Enter the trade specifics within your brokerage account. Input the stock ticker symbol and number of shares you wish to trade.
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Select the type of trade. Before submitting the trade request, or order, to your online broker, you must specify the type of stock trade. The most common types of stock trades include a market order, whereby the broker purchases or sells stock at the current stock price, and a limit order, whereby the broker will purchase or sell a stock at the price you specify. Use a limit buy order for future stock trades at a price lower than current market price. Use a limit sell order for future trades at a price higher than current market price.
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Submit the trade request online. Complete any outstanding items on the online broker's order page, then click "Submit."
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Tips & Warnings
Compare online brokers to determine which has the most favorable commission structure based on your investment style.
Invest only in stocks that you have thoroughly researched. Limited research has a potentially negative impact on your personal finances.
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- Photo Credit new york stock exchange image by Gary from Fotolia.com
