Once you have settled on the stock market as your next investment move, the next thing you need to know is how to buy stock. To start with, the process is now much easier than in the past, and you can even buy stock online. It can be a thrilling moment if it’s your first time buying into a company.

How Do I Buy Stock?

Here is a summary of the steps that will see you take up stock ownership in a company and potentially become a thriving investor.

  1. Where to buy stocks: Most investors use online brokers, but there are other options.
  2. Steps for buying stocks: Set up an investment account, pick a stock, and settle on the number you want to buy.
  3. How to sell stocks: It’s important to know how to sell stocks as well as buy them, which will make you a stock trader.
  4. Bonus tips for navigating the stock market

The stock market is still churning out success stories, and you can be next. First, you must know how to purchase stock to make the most of every investing opportunity. Here are the details.

Where to Buy Stocks

Buying a stock is not really complicated, and the number of listed companies gives you the freedom to decide which ones to buy from.

You can choose to buy stock in a company:

  • Through online stock brokerages
  • From a full-service broker
  • Via money managers/financial advisors (which is the most expensive option)

All of these are securities brokers that will buy stocks on your behalf, but online stock brokerages are the easiest. They’re not only more flexible, but they give you more control. What’s more, you can set up an online stock brokerage account and start trading in minutes (more on this shortly).

Which Is the Best Brokerage?

Your decision about which brokerage to use can mean the difference between realizing bountiful returns in your new venture and suffering a reversal of fortunes. There are a whole lot of factors in play here, and asking the right questions will help you begin your investment adventure on the right foot.

The most important questions to ask before picking out a brokerage service are:

  • What is the fee? As a trader, you want to channel more of your money to grow your stock portfolio and less on brokerage commissions.
  • What support can I expect? You have hardly gotten your feet wet, and a dependable helping hand will help you avoid the common pitfalls.

There could be other issues like your investment style — are you after quick gains or into buy-and-hold? — but these are the key. Additionally, when looking over possible online brokerages, consider the educational resources on offer, commission structure, ease of navigating around the site, quality of support, and available portfolio construction tools.

There are brokers that allow you to hone your skills before investing a penny using demo accounts, and that could be a plus. Factor in all that and get an online broker that ticks all the boxes.

Can I Buy Stocks Without a Broker?

Going back to the question of “where can I buy stocks?,” it’s important to note that you have alternatives other than online stock brokers. For instance, some companies allow you to order their stocks directly, and this can admittedly look super attractive, considering that there are no extra fees.

Nonetheless, some of these options don’t offer the same support and fundamentals, such as investment education, real-time market data, and analysis tools that online brokerages do, meaning that your safest bet may still be an e-broker.

Congratulations! You’re now ready to step into a brave new world where others — think Warren Buffet and his peers — have made a multi-billion-dollar fortune. Now that you know where to buy stock, the next question is “exactly how do I buy stock?”

Steps for Buying Stock

Set Up a Stock Investing Account

This is perhaps the most straightforward step, and it should take you just a few minutes.

  • Head over to the office or website of your chosen broker.
  • Fill out an account application form. You’ll be asked for your phone number, home/work address, and your social security number.
  • Supply an identification document.
  • Fund your account by check or electronically.

Single Out a Stock to Invest In

There’s no magical way of pinpointing the perfect stock, and there are plenty of worthy stocks waiting for you. The following tips should help you sort them out.

  • Get a feel for the company’s general state. The annual report gives a broad perspective of the financial condition of a company.
  • Assess the business. Your broker’s website should have comprehensive information and useful analytical tools. Use these to probe the implications of the SEC filings, quarterly earnings updates, and related details.
  • Get the latest news. The chief determiner of the share price is supply and demand. News plays a big part in fluctuations of selling/buying trends and can be a handy indicator of future pricing.

Also helpful are the tutorials, podcasts, and webinars on picking stocks from your broker. Above all, don’t overstress yourself — you should instead focus on the joy of owning a piece of a brand that you have always longed to be associated with.

How Many Stocks Should I Open With?

You don’t need to shell out thousands of dollars at once, and many of the immensely successful investors started small — some with just a single share. That’s still the best way to learn the ropes. A smart strategy for the future is to diversify, but you should strive to grasp everything before you start distributing your eggs into separate baskets.

Select an Order Type

To execute the buy order, you’ll need to specify your order type — it may not guarantee your desired price, but it will ensure the immediate execution of your purchase. The jargon on your trading screen can be overwhelming, but luckily, you need the basics of only two order types to buy stocks:

  • Market order: This tells your broker to buy (or sell) the stock immediately at the best current price. Use this order for stocks not subject to wild price shifts (check the trends).
  • Limit order: This is a request to buy (or sell) the shares at a set price or better. This order is best to apply when purchasing shares with high volatility, since it has a price cap.

How to Sell Stocks

The safest way to build wealth from stocks is playing the long game, because in the long run, the average stock price is less variable. It’s vital that you learn how to sell stocks as well as buy them, since surprise opportunities often emerge. There might be times when you want to cash in on a profitable opening; for example, a rumored company takeover. Or you might be caught up in a cash emergency. You might also want to cut your losses by exiting an underperforming stock, one that has reached too low a price.

How then do you sell stocks? Again, disposing of your shares is a piece of cake using the following steps, and the trade typically settles (and your cash lands) in two business days.

  • Simply log into your trading account.
  • Once logged in, complete the trade ticket to trigger the sale.
  • Remember to choose the correct order type and how long you want the order to remain open before submitting the ticket.

Bonus Tips for Navigating the Stock Market

  • Act now. Those who purchased 100 stocks worth $10 yesterday are on course to pocket some returns if the price closes at $10.05 tomorrow.
  • Set long-term goals. Having a purpose, such as a retirement income, will help you remain motivated, even during price downturns.
  • Keep an eye on the brokerage fees. They can quickly eat into your returns.
  • Diversify over time. There’s a reason why big investors have shares in different entities.
  • Don’t allow mistakes to kill your dreams. Learn from your mistakes and soldier on.
  • Keep learning and experimenting. For example, you can study and try out other types of market orders, including a stop-loss order.
  • To succeed, ignore the herd mentality, rein in your emotions, and practice risk management.

The stock market is a robust, viable investment vehicle, and it can bring you the financial freedom you crave. Use this guide to get started, and the journey will be fun and rewarding.

Get all the tips and tricks from an expert in our next Raging Bull Webinar. We will be sharing valuable tips and trade alerts to help you get started.

Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

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