How to buy stock ?

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Do you know how to buy stock?  Or are you completely new to the stock arena? Or don’t have any idea of buying stock? Yes, if you are new to stock buying process, then it can be a little bit complex and tricky.

You just have to take few steps and prepare yourself for purchasing stocks.  When you’re entering into the process of stock trading, you don’t have to doubt yourself or delay the decision-making, rather be confident and decisive of being well-informed about different aspects of stock buying.

Buying stocks with the help of a broker is somewhat less these days which were once the only route to buy stocks. As there is the internet, one can easily bypass the broker and his wild fees and can buy the stocks straight from the source.


If you want to buy stocks, the first thing you have to open a brokerage account that can be set up in half an hour. Then, add money to your account and next follow the steps identity, select & invest in the companies.

The stock purchasing process may seem confusing at first, but it is pretty direct. The following 5 steps to follow:

  1. Choose the Online Broker

The simplest way of buying stocks is via an internet stockbroker. After completion of opening & funding of the account, you can purchase the stocks from the broker’s site within minutes. Or you can use the full-service stockbroker or buy straight from company.

Setting up an online brokerage account is as simple as setting up a bank account. Completion of setting up the brokerage account is done through providing identification proof and funds your account by check or internet banking.

  1. Evaluate the stocks for buying

As you have already set up and funded the brokerage account, it’s time to enter into researching stocks. When you start researching stocks, the best thing you can do is to recall the companies you appreciate as a consumer.

Never be distracted by the flood of data or real-time stock market twists and turns whenever you initiate an evaluation of the stocks.

Simple Idea:  Look for companies that you want to be the part-owner

Famous investor Warren Buffet often says, “Buy the stocks of a company because you want it to own, nor want its stocks to rise.

When you’ve zeroed on the prospective companies, it’s time for you to research those companies.  First, go through its annual report or the company’s annual letter to the shareholders. This annual letter will give you a first-hand experience overall status of the company and the background of numbers given in the report.

Then, there is the availability of tools and information on the broker’s site that will help you to analyze the business with aspects like SEC filings, chat room transcripts, quarterly earnings data, and recent developments. Some of the online brokers offer tutorials for handling their tools and basic data about choosing the stocks.

  1. Decide about the number of shares to buy

Never be in pressure to buy certain amount of shares or filling up the entire portfolio with a particular stock at once. If you can purchase a single share, just to get the feel of owning individual stocks or you have the courage to pass through rough patches with minimum stop loss.  There is the option for buying a fraction of shares.

Price plays the most crucial role while deciding about how many shares to be brought.  Consider the following points:

  • Know about the present share price of the stock you like to buy
  • Divide the total amount of funds you have that you will invest in stock by its present share price.
  • If the broker is allowing you to purchase fractional shares, the result you get from the second step is the number of shares you buy.
  1. Knowing the stock trading terms
  • ASK: For a buyer, the price that the seller is agreed to accept for stock.
  • BID: For a seller, the price that the buyer is agreed to pay for stock.
  • SPREAD: The gap between the highest bidding price and lowest ask price
  • MARKET ORDER: The request for buying or selling the stock ASAP at the best price that is available.
  • LIMIT ORDER: The request for buying or selling the stock at a specific price or more than that.
  • STOP-LOSS ORDER: When the stock reaches at a particular price, that is “Stop Price”, the market order is unleashed and the complete order is given at prevailing price.
  • STOP-LIMIT ORDER: As the stop level is achieved, the trading will turn into limit order and is filled up to the level where the specified price level would be met.
  1. Optimizing the stock portfolio
  • ANALYZE: It starts with a written statement and “why, how, and what considerations are important for reaching the target of optimizing the stock portfolio.
  • GET INFO: Equip yourself with enough information. For that read newspapers, articles, magazines and of course internet.
  • THINK EXIT: Find the exit plan for removal of emotion from investment equation and secure the hard effort you put into for optimizing the stock portfolio. For example, consider a stop point or threshold point of 25{702f03224c37cd48a13de14d0c92394faf68fbbd03c6d002de2a1a71aee58c0f}. If the stock price falls 25{702f03224c37cd48a13de14d0c92394faf68fbbd03c6d002de2a1a71aee58c0f} from its peak, you would sell with no hesitation.
  • STRATEGIZE AND BUYING: Think about an investment strategy and optimize the stock portfolio and ultimately allows to achieve your investment objective. Consider the investment objective, timeline for investment and risk-tolerance point, and choose an aggressive, conservative or moderate strategy.

Buying Stocks without a Broker

If you want to buy stocks without a broker or commission or fees and want to put all your money into work, then you should follow steps:

  • Open a discount brokerage account
  • Directly buy the mutual funds from fund company
  • Buying of single shares stock

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