How to Buy Stocks Online

So you are wondering how to buy stocks online.

Buying stocks has never been easier, thanks to a myriad of online brokerage firms. As a result, many Americans are discovering that they can take more control of their investments and manage them like never before.

Buying stocks online, however, comes with its share of uncertainty and risk. It is therefore never a good idea to blindly start buying and selling stocks online without a crash course in the basics of online stock trading.

Steps on How to Buy Stocks Online

Follow this guide on how to buy stocks online to save on brokerage fees while building your long-term portfolio gains.

  • Decide whether you want to use the services of an online discount stock broker or an online full-service stock broker. There are a great variety of online discount stock brokers that offer convenient, low transaction fees. However, if you’re new to the online trading game, then it may be best to go with a full-service stock broker.

The main difference between the two is that a full-service stock broker will provide you with online trading advice and will be there to answer your questions and address your concerns. This type of advice and assistance, however, comes with a price, although many individuals consider the assistance well worth the added costs.

  • Before you buy your first stock online, make it a priority to get an education on stock trading. Read books, carefully study the market for a few months and perform research on companies of interest. Some of the things you will want to start paying attention to include the company’s share price, its historic performance and its historic volatility.

  • Subscribe to an online community of online investors. Online communities are a great way to ask questions, share advice and learn new things.

  • Carefully consider your trading goals, your strategies and your philosophies regarding your online trading.  This will help you when making decisions regarding the purchase of stocks. Always remember to ask yourself: how much am I am willing to risk?

  • Set up an account with your chosen online brokerage firm and fund that account. Funding your account essentially means transferring money, either from your bank account or by a personal check, into your online account. You then use that money to make your trade purchases.

  • Develop short and long-term investing goals so that you will have a general guide in place when buying stocks.

  • Begin your first stock purchase by entering the ticker number of the company and the number of shares you want to purchase into your online account. Most online brokerage firms will give you the option of making your purchase at the current market price or setting certain limits regarding what you are willing to pay for the stock.

  • Consider setting your buy/sell limits.  With the automation of online trading, you can now easily set the price levels at which you wish to buy and sell.  If a stock price falls to a particular level, this will automatically trigger a sell order and liquidate your position.  In contrast, if you wish to buy a stock once it hits a particular price point, you can set a buy limit that will instantly snatch up shares at your determined price.

  • Always remember the key philosophy of online trading: Buy Low and Sell High! This formula may be easier said than done, but with a little research and a keen eye, you can often make decisions that will either yield you a return or cut your losses.

  • Avoid letting fear and panic take over. This is the key when buying stocks online, as these two emotions can quickly cause you to sell at the wrong time. This is why having a plan in place and sticking to it is so critical when buying stocks online.

The advent of the internet has given millions of investors the ability to trade the markets full-time, giving rise to the prevalence of day traders and swing traders.  Learning how to buy stocks online, however, is only half of the battle.  The other half involves making the right choices – which can only be garnered through practice, trading strategy, and planning.