What do you need to buy stocks today: 7 steps to follow

Oluwatoni Olujinmi

Stock investing is a potent tool for building wealth and reaching long-term objectives. Buying stocks can seem like a complicated procedure if you’ve never done it before. 

But if you know what you’re doing and have a plan, you can trade stocks with confidence. This article will walk you through all you need to buy stocks today empowering you to embark on your investment journey.

7 steps to buy stocks today

Online stock trading makes it simple to purchase your first shares of stock, but before you do, it’s important to establish your financial priorities. Do you plan to put away money for your own retirement, a house, or your kid’s college? 

Your investment approach will benefit from your goals being well-defined. Consider how you feel about market uncertainty and probable setbacks when making this evaluation.

Furthermore, spend some time learning about the stock market and investing. Stocks, shares, dividends, and market orders are just a few of the essential investment concepts you should know. With this knowledge in hand, you’ll be able to move on with confidence.

Here’s a step-by-step guide to start your stock investing journey.

1. Choose a suitable online broker

You’ll need a brokerage account to buy stocks, and you can open one in about 15 minutes. Think about costs, commissions, customer service, and trading platforms when comparing brokerages. 

Make sure the broker you go with is a good fit for you. Popularity of online brokerages is due to its convenience and ease of use. Your chosen broker acts as your agent in all stock-related dealings, including facilitating purchases, maintaining a stock portfolio, and collecting dividends. 

You’ll need some rudimentary banking info to start an account, and then you can link your checking to the brokerage so you may move money back and forth. E-Trade, TD Ameritrade, Fidelity, and Charles Schwab are just few of the many popular online brokerages.

Read also: A comprehensive guide to stockbrokers: roles, requirements, and salaries

2. Fund your account

The next step after opening a brokerage account is to fund it. Make a deposit to your brokerage account equal to the amount you feel confident investing. 

Funding your brokerage account can be done in a number of ways, including direct deposits, wire transfers, or the ability to link your account to a credit card or checking account.

3. Research and select stock

The most important part of investing is the research and stock selection process, which you can only begin once you’ve financed your brokerage account. 

The first step is to find a company that fits with your investing objectives, risk profile, and personal preferences. Don’t let the volume of information and the volatility of the market in real time discourage you from doing thorough research. Try to keep the goal basic. In the words of Warren Buffett, “buy into a company because you want to own it, not because you want the stock to go up.” By sticking to that policy, he has succeeded quite well.

After you’ve found these companies, you should investigate them thoroughly by reading their SEC filings, listening to their conference calls, checking their quarterly financial reports, and reading any news that has come out about them recently. The majority of online brokers also offer educational resources, such as how-to videos and seminars covering fundamentals of stock trading.

4. Figure out how many stock you can buy

Find out how much stock you can afford to acquire at this time. You shouldn’t feel compelled to buy a specific number of shares or to allocate a large portion of your portfolio to a single stock.

The good news for those who are new to trading is that many brokers will allow you to trade fractional shares. This allows you to invest in a smaller portion of even the most expensive equities. You can make a modest beginning. Fees can quickly eat away at your investment capital, but not with no-commission online brokers.

Ideally, you can add to your investments on a periodic basis. This is the path to true prosperity. You should calculate not only how much you can buy initially, but also how much you can invest in the future. Dollar-cost averaging is a method of spreading out purchases over time to lessen financial risk.

5. Determine the order type to buy your stock

Select the appropriate order type before submitting your purchase. Market orders and limit orders constitute the bulk of all orders placed. 

To buy shares at the current market price, you can place a “market order” with your broker. You are giving up the ability to choose the price at which you complete the order. A limit order lets you specify an exact purchase price for a stock. Some brokers will let you keep a limit order open for longer than three months.

If you’re trading a large number of shares but don’t want your trade to affect the company’s price, then you should use a Limit order, whereas if you’re trading a small number of shares or the stock is very liquid, then you should use a Market order. Determine which order type best fits your investment objectives.

6. Place your order

You can place an order with your broker by using their trading platform. Fill out the fields labeled “Stock Symbol,” “Quantity,” and “Order Type,” respectively. 

Before placing the order, please verify the details are correct. Make sure you’re aware of and comfortable with the whole cost of your trade by checking all the associated fees and commissions.

7. Monitor and manage your investments

Your order will be processed immediately, making you a shareholder once it is fulfilled. Keeping tabs on your investments, whether it be the firm itself, its quarterly or annual earnings, or the industry as a whole, is essential

You can increase funding for the role as the company’s success grows. Then, as your knowledge increases, you can expand your stock holdings.You can control your exposure by using stop-loss or target-price orders. 

Keep your portfolio diversified by reviewing it on a regular basis and rebalancing it if necessary. Your company’s share price is bound to drop at some point along the path, even if just temporarily. If you know enough about the company, you can make an informed decision about whether or not to sell your shares at a discount.

An accessible way to participate in the financial markets 

Investing in stocks is a fun and simple method to take part in the modern financial markets. If you follow this detailed guide, you should have no trouble purchasing stocks.

Keep in mind that stock market investing is not without its risks, and that you should always be learning and improving your stock market knowledge.

Read also: The 9 major stock exchanges: what is their influence in global economy

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