How to buy stocks online
Stock Investing buy stocks online two parts:Learning about the Stock Market, Making your Investment
How to buying stocks online for beginners buy stocks is a website for online learning stock investing for dummies.
Introduction to stock investment how do i buy stock, learning how to buy stocks for beginners
Stocks are not just pieces of paper; rather, they represent ownership of part of a company. In today's world, the process of buying stocks is easier than it has ever been. There is no shortage of brokerage firms that would be happy to open up a trading account for you; places where making a purchase is as easy as pointing and clicking. But just because the process of purchasing equities is easy does not mean you should approach it as a simple task. Understanding the tools available and how to use them to structure an execution strategy may save you thousands of dollars in opportunity costs.
Learn how to stock Investing buy stocks online for beginners

Stock Investing Part 1 of 2: Learning about the Stock Market

Buy Stocks online for beginners
Buy Stocks online for beginners
1 Learn how the stock market works.
Go to the local library or bookstore and search online to find books and other resources on stock investing.
  • Your basic goals when investing in stocks is to buy when the price is relatively low and sell when it is higher. The difference between your purchase and sale prices is where your profit comes from.
  • For example, imagine that you buy 100 shares of stock priced at $15 each. That's a $1,500 investment. If, after two years, the stock price has risen to $20, your $1,500 investment has turned into a $2,000 investment, giving you a $500 profit.
  • On the other hand, if you buy 100 shares of a stock priced at $50 each, you've made a $5,000 investment. If, after two years, the stock price has fallen to $25, your $5,000 investment has turned into a $2,500 investment, giving you a loss of $2,500.
  • Stock prices are deeply affected by peoples' opinions of how companies are performing, not always the intrinsic value of the stock. A stock price typically goes up when more people want to buy the stock than to sell it. A stock price goes down when more people want to sell the stock than to buy it. This means that short-term prices are often affected by people's emotions, rather than fundamental facts. Prices can move based on tidbits of information, misinformation, and rumor.
2 Understand important terms.
There are a number of terms you will hear and read about in researching the stock market and individual stocks that it will be helpful to understand. A few of these are defined for you below.
  • The "ask price" also known as the “offer,” is the best price at which you can buy shares of a stock.
  • The "bid price" is the best price at which you can sell shares of a stock.
  • "Good till canceled" describes an order to buy or sell a security at a specified price that remains active until you decide to cancel it or the trade is executed.This is in contrast to a "day order," which expires at the end of the day it was entered.
  • A "market order" is a request buy or sell an investment immediately at the best available current price. The benefit is your order is very likely to be executed promptly. The downside is that it could be executed at a price much higher or lower than the current ask or bid for stocks with little volume or liquidity. In short, the execution of the order is guaranteed, the price is not.
  • A "limit order" is a request to buy or sell an investment at a specific price or better. The benefit is that your order will only be executed at the price you specified. The downside is that there is a chance your order will not be executed, if the stock you are interested in never reaches that particular price. In short, the price is guaranteed, but the execution is not.
  • A "stop order" is an order that becomes a market order once a certain price is reached. These orders are intended to limit losses that can occur as a result of changes in price. In the case of stop orders (or stop-loss orders), neither price nor execution of the order is guaranteed.
  • "Market capitalization," or "market cap" refers to the total value of a company's shares. Market cap is determined by multiplying the stock price of a company by the number of shares it has issued. For example, if the stock price of any given company is $100, and the company has issued 500,000 shares, its market cap would be $50,000,000. This means that a company whose stock price is $7 can have a higher market cap than a company whose stock price is $30, if the first company has five times as many shares issued as the second.
3 Consider a mutual fund. 
Mutual Funds pool the money of many investors to invest in several stocks and/or bonds. When you contribute to a mutual fund, you get a stake in everything the fund invests in. This can be a lower-risk alternative to buying stocks individually.
  • Mutual funds are more diverse investments than individual stocks. This means that they include a wider range investments (e.g. several different companies, bonds, or both). If the value of one company in a fund goes up, it's not likely to make much difference in the big picture. At the same time, if the value of one company in the mutual fund goes down, it's not likely to have a serious effect on your overall investment.
  • Buying individual stocks is riskier than buying mutual funds. This is because your investment is more concentrated. If you buy individual stocks and the value of the stock tanks, you've lost a lot of your investment. At the same time, the reward can be higher. If the value of the stock skyrockets, you've made much more money than you might have investing in a mutual fund.
4 Consider an ETF. 
Exchange Traded Funds (ETFs) are similar to mutual funds. Investing in an ETF gives you a stake in a several different assets (e.g. stocks, commodities, or bonds). But, ETFs are bought and sold on the stock exchange like common stocks. This makes them more volatile, but also more liquid.
  • Like stocks, the value of an ETF fluctuates throughout the day because it is traded on the exchange, but like a mutual fund, your investment is more diversified than buying individual stocks.
  • ETFs tend have lower fees than mutual funds.
  • ETFs come in two varieties: active and passive. Passive ETFs are index funds designed to track a specific benchmarks, such as the SPDR. They are not managed by a fund manager, and will rise and fall with the market as a whole because these funds' investments don't change. Active ETFs are managed by a fund manager or investing team that chooses the stocks that the fund will invest in. These funds are intended not to track an index, but to beat it through strategic purchasing decisions. This means they have the potential for higher than average returns. Fees, however, also tend to be higher for these ETFs.
5 Research some investments. 
Research the companies and/or funds you are considering investing in thoroughly before buying any stock. You are making a bet about how well you think a company or fund is going to perform in the future, so the more information you have, safer your bet can be. This process is called "due diligence." Start with online financial sites to get a quick idea of the business and key financial ratios.
  • If investing in individual stocks, look at the balance sheets and income statements for the past 10 years to see if they are sound. For mutual funds and ETFs, it is also a good idea to look at past performance.
  • Similarly, read the recent annual and quarterly reports (SEC 10-Ks and 10-Qs) of any company you might buy stock in. Explore the company's website, if one exists. Read analyst reports, if available.
6 Develop a strategy. 
Before you actually purchase any stocks, it's important to decide what kind of investor you are and what strategy you will pursue. Some common approaches to investing are described below.
  • Some investors use "fundamentals analysis" to pick stocks. This means they use information about companies and the market to make long-term investment choices.
  • Others use "technical analysis," using charts of price movements to decipher short-term investor psychology.
  • Short term strategies are usually riskier than long-term approaches.
  • Take some time to learn about each of these strategies, and determine what will work best for you.
7 Watch the market. 
Keep an eye on the value of the stocks you are interested purchasing, so you know when to buy stocks, or sell some that you already own.
  • Before buying stocks, you might want to try paper-trading for a while. This is simulated stock trading. Keep track of stock prices, and make records of the buying and selling decisions you would make if you were actually trading. Check to see if your investment decisions would have paid off. Once you have a system down that seems to be working, and you've gotten comfortable with how the market functions, then try trading stocks for real.


Stock Investing Part 2 of 2: Making your Investment

1 Investigate the possibility of buying direct. 
Some companies offer direct stock purchase plans (DSPPs) that allow you to purchase stock without a broker. If you are only planning to buy a small amount of stock from one or a few companies, this may be your best option, as it saves the time and cost of going through a broker.
  • Search online or call or write the company whose stock you wish to buy to inquire whether they offer such a plan; ask them to forward you a copy of their plan's prospectus, application forms, and other relevant information.
  • Many plans allow you to invest as little as $50 per month, automatically withdrawn from your bank account.
  • Pay close attention especially to the fees involved. A few companies, such as Exxon Mobil, offer no fee investment plans.
  • DSPPs also allow you to reinvest all your dividends automatically. Your dividend is a payment made to stockholders, based on the corporate profits of the company. Some companies even give you a discount for dividend reinvestment.
2 Choose a broker. 
If you can't buy the stock you want to invest in directly, you'll need to find a broker. Brokerage houses vary in how they treat different types (and frequencies) of transactions. This means you'll need to compare your options and choose the one that suits you best. Generally speaking, there are two types of brokers: full service and discount.
  • Full service brokers are more expensive, with the higher costs going toward the additional services they offer. These are advice-oriented outfits whose services are targeted toward investors interested in receiving recommendations and guidance.
  • If you plan to make your own investment decisions, it is more prudent to choose a discount broker. There is no point in paying a higher fee for services you aren't going to use. Still, you must examine each firm’s platform closely to make sure their offerings align with your investment objectives.
  • Search for "online discount brokers" on a search engine to find a list of brokers that you can use to buy and sell stocks online. Be sure to compare their fees and see if they have any hidden fees before signing up.
3 Open a brokerage account. 
Contact a broker about opening an account. Your broker will then require you fill out a form containing personal information that will be used in placing your orders and for tax purposes.
  • Your broker must report your stock trades to the IRS. You will need to fill out the required forms and mail them back to the broker, possibly even before they will allow you to make your first trade.
4 Deposit funds. 
Send your broker an initial deposit of money that will be used to make your first stock purchase.
  • First, make sure you know the minimum required to open an account. These amounts do vary.
  • You will most likely need to deposit a check. Some brokers will not accept your initial deposit in the form of a money order or third-party check, and very few accept cash.
  • Review the firm’s instructions in order to make certain that your funds are eligible to be deposited.
5 Enter an order. 
A request to your broker to buy stock is known as an "order." Select your stock, notifying your broker of the company's "symbol" (a 1-5-letter code), the number of shares to buy, and the length of time for which your offer will be valid (e.g. single day vs. good till cancelled).


Stock Investing Tips
  • Your investments with each broker is insured by the SIPC for up to $500,000. If you have more than $500,000 with a broker, consider using additional brokers to diversify against the risk of your broker going bankrupt.
  • People who promote a stock often do so because they want to sell it. In other words they hype a product in order to sell it. This way of looking at things is called "contrarianism." So when people say "buy", it may actually be time to sell, or if you don't hold stock already, it may not be the time to buy at all.
  • Maintain meticulous records of all your stock trades, including the stock, size of the trade, cost basis (price you pay including any commissions, fees, and adjustments), sale price, and dates of transactions. You will need this information to calculate capital gains taxes. From time to time, you will need to adjust your cost basis to account for return of capital, splits, depletion, spin-offs, distributions, etc.
  • Depending on the brokerage fees, it will be difficult (or take a long time) to recoup an investment of less than $1500 on any single stock purchase.
  • Although you should "diversify" your stock portfolio by owning stock in several industries, buy stock primarily in industries you are familiar with.
  • Don't buy too much stock in one company. This will insulate your from firm-specific risk (the risk that an individual stock may blow up due to some unexpected adverse developments in the underlying company); balanced portfolios tend to increase in value in the long-term.

Stock Investing Buying Stocks Warnings
  • Do not let your emotions or bias cloud your judgement when you are buying stocks. Just because you love a particular brand of doughnuts does not mean that you should be buying stock in the company. Even the best products can be produced by companies with terrible management, which will eventually run them into the ground.
  • Avoid the common mistakes that plague new-comers to the stock market, chief among which is speculation in stocks. Speculation takes many forms, including buying and selling too frequently in an effort to make a fast profit within months, chasing the hottest stocks (stocks with the biggest recent gains), also known as "momentum investing", feeding the dogs (i.e., indiscriminately buying stocks with the biggest recent losses or trading at low valuations), buying penny stocks (stocks of small companies trading at less than $1), buying stocks on margin, short selling, and buying options and financial futures.
  • Do not use market orders for thinly traded stocks; use limit orders only. Thinly traded stocks are seldom-traded stocks from small, unknown companies.They tend to have much wider spreads, which means a market order can be filled at a much higher ask price than the last traded price of the stock. These stocks can be difficult to find though, so it might take you a while to find a low valued stock.