Your Step-by-Step Guide to Buying Stocks

Whether its on TV or on the internet, watching someone buy stocks can often seem quite difficult and confusing. For the most part, these outlets will try to glamorize the process, and make it seem like something reserved for the world best hackers, as they sit in front of a PC with 3 monitors, all showing you confusing charts and a series of terms you simply don’t understand. While this might be your setup as you move forward, and become a confident, semi-professional trader, in the beginning you can get started simply with your laptop or smartphone, and the right resources and education.

At Stockia, we are here to help educate everyone from beginners to intermediate traders – walking you through the initial basics and fundamentals, and providing you with the foundation you need to build upon and become a confident, educated trader who is comfortable navigating the market on your own. In this article, we will provide you with a step-by-step guide to buying stocks, from the technical aspect of actually filling orders, to how you can go about doing research and acquiring knowledge you need to make educated trades that can lead to short- and long-term profitability!

Here are a few vital steps to take, when buying your first stock.

• 1. Choose Your Online Broker
  In years past, the vast majority of traders were forced to purchase stocks through an actual, physical stockbroker. And while these individuals did and still do offer a valuable service, with advice and guidance, they charge much fairly high commissions, and were mostly necessary when information wasn’t as readily available as it is today – with the internet, of course. Online brokers nowadays offer us the ability to make trades, and purchase stocks on our own, from the comfort of our homes and right there on our smartphones. Plus, many of these brokerages, such as Robinhood or Webull, no longer charge commissions, and the ones that do, are nominal and generally offer additional services that are more than worth the fractions of a cent per share they usually charge.
  Setting up an online brokerage account is quite easy, and is as simple as setting up an email address, just with a bit more personal information such as your SSN, address, tax info, and more. Once you complete your setup, and have attached a funding source, such as your bank account, you simply add funds to trade with, and you can soon get started.
• 2.Do Your Homework
  Sure, setting up your account, adding money, and purchasing stock is pretty easy for anyone who is computer literate – but one of the most important steps in the process is for individuals to do their research, and create a plan to decide which stocks they would like to buy. Using a service suck as Stockia.io’s subscription stock picks can provide you with a number of amazing stocks to choose from, with one of the highest success rates in the business, however its still important to be able to do the research on your own and choose your own stocks – especially if you would like to be a confident, well-rounded trader soon.
  One good strategy to start with is by looking up companies you might be familiar with, such as electronics and technology you own and have an interest in or the appliances you tend to use. The pharmaceuticals you might take, the gym you go to, the types of clothes you wear, and much more. As a consumer, you know a decent amount about a product, the quality of it, if its overpriced, and a lot more. For instance, an avid gamer, who might research the release date of a heavily anticipated game, might choose to invest in the stock of the manufacturer or makers of the game, before the release anticipating they will make quite a bit of money from pre-orders, as well as the overall “hype” surrounding the. And while things like technical analysis and chart reading are certainly important skills for traders to learn, try not to both yourself with this too much in the beginning, as it requires several weeks, months, or even years to master those types of skill. One good way of thinking, that renowned investor and trader (likely the most successful ever!), Warren Buffet often preaches is to buy into companies with solid fundamentals, that you would want to become an owner of, rather than just because you think the stock will go up. This is a good ideology, as numbers can change, and you can profit off small blips and bumps in the market, but these moments take a lot of skills and technical knowledge to predict. During your early days of trading and investing, its best to look at the overall picture and read as much as you can about things such as their quarterly earnings, conference calls to shareholders, any deals they’ve recently been a part of, government interactions, and the news overall.
• 3.Choose How Many Shares to Buy
  The fact is that when you are choosing the number of shares to purchase, it is completely up to you, and you should never feel that you have to buy any more or any less, just because you read something online in the news. For beginners, its best to start out small, and slowly build up to more and more shares, over time, as you become more comfortable. Your goal is to turn a profit, but it is also to avoid taking a loss, and mitigating losses as best you can. Also, an important thing this teaches you is the ability to put your emotions aside, and ride out the bad times, in hopes of better times ahead.
  In addition, an interesting concept that many newer brokerages offer is the ability to purchase fractional shares. Allowing you to buy much larger stocks such as Amazon or Google, of which you might not be able to afford a full share, but can easily buy ¼ or a ½ a share. Make sure you buy a number of shares that you can afford and don’t mind being without this money for a period of time.
• 4. What Type of Order?
  When you are purchasing stocks, there are a series of different orders you must choose from when attempting to fulfill your orders. There are a number of different terms you must familiarize yourself with, here are some of the most important and most common to learn when trading stocks.
  Market Order: This is a common type of order when purchasing or selling stocks. It means that you would like to execute the trade as soon as possible, and at the best available price the market currently offers for that stock.
  Limit Order: Another common term, and type of order when purchasing or selling stocks. This means that you would like to execute the trade at a specific price point, and only at that price point.
  Stop or Stop-Loss Order: This is a type of order where a trader essentially has set the system to execute a market order at a specific price, or the “stop price”.
  Stop Limit Order: Similar to a stop loss, however when a stop price is met, the trade becomes a limit order and the order gets filled up to the moment at which the specific price limits are met.
  Ask: This is for Buyers, the price sellers are willing to accept for the purchase of the stock.
  Bid: This is for Sellers, the price buyers are willing to accept for the purchase of the stock.
  Spread: The difference between the high bid and the lowest asking price.
  You can learn more about these types of orders within out other articles, as they will delve deeper into the specific nature of each.
• 5. Diversify and Organize Your Portfolio
  From the moment of your first purchase within the market, if you take the right steps, and acquire the right education – while staying away from the scammers, and the “gurus” with ideas that sound way too good to be true, you can slowly achieve long term success, and earn a lot of money through the stock market. One of the most important things you need to learn however, is to diversify your portfolio and keep a smart perspective about things – at times certain sectors in the market will be up while others will be down, if you have stocks that are within all sectors, than you will be able to balance your gains and losses and put money into the areas that are up when needed, and this allows you to ride out the downtrends. This is vital, as it allows you to remain profitable at all times. These types of skills will grow with time, as you learn to grow and expand into other areas and take larger and larger positions.

For more knowledge on becoming a savvy trader or investor, be sure to checkout more of Stockia.io’s Education resources.