How to buy shares step by step (for beginners)
Trading in the stock market differs from trading currencies (forex market), as the purchase of shares is usually associated with minimum deposit requirements, identity checks, and other technical things. Perhaps the most important part of the answer to the question of how do I buy stocks is finding a good, trustworthy broker. This will ensure that your funds are protected at every step of the trading process.
Besides, another essential step is to search for the right stocks to buy. It is always recommended to find stocks of companies in an industry that you have information about to facilitate further information and analysis. Setting a budget is also an important thing that every aspiring trader should consider before starting to invest in the stock market. In this guide, we will answer the question of how to buy shares online step by step.
How do I buy shares?
Investing in the stock market is a great way to generate a large amount of returns. But it is not that simple, buying stocks requires a lot of knowledge as well as experience in the market in order to avoid all the risks related to trading.
If you are a beginner trader and want to take your first steps in the stock market, there are several things you need to consider before you start trading. It is important to know what kind of investor you will be in the future and this includes your investment goals, the amount of risk you are willing to take, and so on.
In this article, we will discuss the step-by-step process of buying stocks in the stock market including choosing a good broker, finding an industry you know, researching high-performing stocks, setting a budget, buying stocks, and setting stop-loss and take-profit orders.
1- Choose a good and reliable stock broker
When you think you are ready to buy shares and execute a trade, you need a good broker to do so. There are two types of brokers: the discount broker and the full service broker.
Full-service brokers advise traders based on their taxes and future planning, and execute trades for relatively high fees. While discount brokers do not ask for large fees, all they may do for you is the execution of trades. You should choose a stock broker according to your financial goals. If you need to know what to do with your money for example, then you should definitely choose a full time stock broker.
There are many other things that an investor should consider before choosing the right broker such as its commission, trading platform, customer support, trust, good reputation, etc.
2- Find an industry you know
This step will help you to find and analyze information easily. If you really like video games for example, then choosing the gaming industry as your target market might be a good decision. But remember that traders can access a lot of information about almost any industry, and the annual report of the company itself always provides an overview of the industry, along with forecasts for future growth, competition, and so on. You can also subscribe to trade magazines and websites that cater to a specific industry to keep an eye on the latest industry happenings
3- Look for high performing stocks
Companies are usually required to publish their information about the company’s profits, revenues, net profits, etc. These reports are very important because they tell the investors how they are going to make gains if the business is facing any kind of risk. You should know that even the big companies face a lot of risks with regards to stock trading, so knowing everything about it will be very beneficial for your future income.
When we talk about how to buy stocks online, it is important to point out that knowing which stocks to buy is the most important question. Knowing everything about the company’s past revenues and cash flows is essential. A review of their future projects may also give you a good picture of what you can expect from trading this stock.
After knowing everything about the top performing companies, think carefully and then choose the one that best suits you to start trading.
4- Determine your budget
The money an investor needs to buy a particular stock depends on how much it costs (stock prices can range from $5 or $10 to thousands of dollars). If your budget is limited, exchange traded funds may be a better option for you.
In order to set your budget perfectly, it is important to ask financial advisors, especially if you are a beginner and do not have enough experience and knowledge. It may cost you some money, but they will tell you in detail what is the most appropriate budget for you to start trading.
The second thing to be aware of, is that without knowing how to properly size your position, you may end up taking very large trades compared to your account. In such cases, you will become very vulnerable when the market moves against you even by a few pips.
5- Buying shares and setting a stop loss order
It is important to set market orders in order to buy or sell the stock at the best available price at a given time. A stop loss is the point at which your trading idea proves wrong and tells you that it is time to exit the market. If you let the price fall anyway, you are probably making the biggest mistake a trader can make.
Stop losses are a good tool for traders to buy and sell small stocks, which have a wider spread, and it is also a good idea when the market has a volatile characteristic and prices start moving very quickly for a short period of time. So if you are wondering how to buy shares, you should take these things into consideration to avoid unforeseen circumstances that may occur while trading in the stock market.
As we explained above, the most important part of buying stocks is finding a good, reliable online broker. This ensures that your money is protected at every step of the trading process. If you are a beginner trader and want to take your first steps in the stock market, there are several things you need to consider before you start trading.
After finding the right broker, you should find the industry you’re interested in, then read all about the company’s past revenues and cash flows before setting your budget and trading. Don’t forget to set market orders in order to buy or sell the stock at the best available price.
Common questions about how to buy shares
How do I buy shares online myself? If you want to buy stocks online, you need to follow these steps. The first step involves finding a good stockbroker, then you should find an industry you know and research which companies are doing the best in the stock market. You must then set your overall budget so as not to enter into trades that you cannot afford.
How much money do I need to buy stocks online? The money an investor needs to buy a particular stock depends on how much it costs (stock prices can range from $5 or $10 to thousands of dollars). If your budget is limited, exchange traded funds may be a better option for you. In order to set your budget perfectly, it is important to ask financial advisors, especially if you are a beginner and do not have enough experience and knowledge.
What stocks can I buy as a beginner? It is always recommended to find stocks from an industry that you have information about to facilitate further information and analysis. If you are interested in video games, choosing the gaming industry as your target market might be the best decision to make. In addition, you should read all about the company’s past revenues and cash flows. Here are some of the best stocks for beginners to buy:
- Amazon (NASDAQ: AMZN)
- Alphabet (NASDAQ: GOOG)
- Apple (NASDAQ: AAPL)
- Costco (NASDAQ: COST)
- Disney (NYSE: DIS)
- Facebook (NASDAQ: FB)
- Mastercard (NYSE: MA)
- Microsoft (NASDAQ: MSFT)
- Netflix (NASDAQ: NFLX)
- Nike (NYSE: NKE)
- Pinterest (NYSE: PINS)
- Shopify (NYSE: SHOP)
- Spotify (NYSE: SPOT)
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