Buying stocks online is a fairly straightforward process. Gone are the days of calling up your broker, unless you want to. This financial article will guide you through the process of buying stocks online.
Finding an Online Broker
The first step is to start an account with an online broker. Since you’re just starting out, focus your selection process on the larger names out there.
I recommend looking at Scottrade.com at some point in your search. They offer many nice features and $7 trades—unless the stock is under $1 per share.
If you’re someone who will need personal attention—face-to-face meetings, phone conversations—look for a full-service online broker.
If the online broker has a local office, that’s a plus. For instance, Scottrade.com has one in my area. When I created my account, I went to the office with a check to fund my account. It was a simple process.
Buying Stocks Online
Okay, you now have your online broker and you’re ready to go. After you log into your account, you can buy stocks online.
To buy a stock online, you’ll need the stock’s symbol. For instance, Goog is Google’s stock symbol. If you don’t know the stock’s symbol, the online broker should have a symbol lookup feature. If not, you’ll find one at finance.yahoo.com.
Next, you’ll need to specify how many shares you want.
Never do market orders. Always do limit orders. When you do a limit order, you specify a price, which ensures that you get into or out of a stock on your terms.
For instance, here’s an example of a limit order:
Stock: Google (GOOG)
Shares: 100
Limit Price: $560
When I place this order, I’m saying that I want 100 shares of Google and I’m willing to pay up to $560 per share for them.
Additionally, you can select an option called “All or None.” When you select this, your order will only be filled if all the shares can be purchased.
So, let’s image that I didn’t select this option. It would be possible for me to receive under 100 shares at or below my limit price.
Another option is the order’s duration. I could put that order for Google stock in for just today (market close) or I can keep it open until I cancel it, which is called “Good Until Canceled.”
Stock Price
When you look up a stock, there will be two prices shown—Bid and Ask. The Ask price is the price that sellers are willing to sell for at that moment. The Bid price is the price buyers are willing to buy at for that moment.
Take a look at this stock overview.
As you can see, Google’s Bid is $552.50 and its Ask is $552.98.
If you were to put in a limit order for $552, you could be “in line” for a little bit, because the Ask price is $552.98.
But, limit orders are your way of saying: “I’m only getting into this stock at my price.”
A less knowledgeable investor would simply use a market order. The order would most likely be executed fast, but he or she would pay “top dollar” for the stock. This isn’t wise.
Buying Stocks Recap
Let’s recap how an order to buy stocks works.
Buying stocks online is a very easy process as you can see. The time it takes for your order to be filled depends on market conditions.
My name is Jason A. Martin. I'm an investor/trader, financial writer and entrepreneur. This is my blog. I also run a social media integration & cross-media design company. If you'd like to follow me on twitter, here's the link: Jason A. Martin
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My name is Jason A. Martin and this is my investment blog. Back in Jr. High School I fell in love with an electrical wiring company's stock on Wall Street. After following the stock daily in the papers—the Internet wasn't around back then—I sent them a letter and they sent me back all sorts of wonderful information about their company.
In High School, we had a stock market contest. All the kids were picking companies that made stuff they consumed. When I announced my beloved company, I was laughed at. Little did they know that my company was going to be the subject of a takeover soon.
Long story short, I won the contest and have made money in the stock market, through real estate investing, currency trading and so forth.
I hope you enjoy Financial Rebel. If you do, please leave your comments and share this site with those you know.
Jason
10 Comments
Thanks for the help!
Steven
10/12/2008
Nice and simple- thank you.
gio
10/12/2008
Once I buy the stock, for how long can I hold it before I sell it again ? In other words can i keep it for an indeinite time ?
ESHETIE YEMIRU
10/29/2008
Great article. I always tell people to use limit trades to control the amount of money spent on the stock. Market trades give you no control, which really hurts you in the long run.
how to buy stocks
2/22/2009
I know it’s about a year since this was written, but how do we SELL stocks properly?
Novice Self-Financial
8/13/2009
I was about to execute my first trade and saw some “terms” I didn’t recognize. Found this site and it was really helpful! Thanks for making it available! =)
Jon
6/3/2010
please e-mail us as we would like to buy stocks on line. Thank you.
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12/7/2010
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daniel james
12/9/2010
One more thing. I do believe that there are lots of skymiles credit card sites of trustworthy companies that allow you to enter your holiday details and get you the prices. You can also purchase the actual international holiday insurance policy on the internet by using the credit card. All you should do will be to enter the travel information and you can see the plans side-by-side. Only find the package that suits your budget and needs then use your skymiles-credit-card to buy it. Sky Miles Credit Cards online is a good way to begin looking for a respected company to get international travel cover. Thanks for expressing your ideas.
sky
5/26/2011
I have never done this before, and did not have a clue as what to do.
You have made it very reassuring, and simple, thank you so much
Peter Pond
2/2/2012
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