Okay, so maybe it’s not that easy at first. But when you get used to buying stocks, it’s like buying candy in a convenience store.
Just a bit of introduction, stocks represent your ownership of shares in a company. If you buy stocks directly, you have the right to vote and claim dividends and other earnings.
When it comes to trading, stocks or shares can be a must-have in a trader’s portfolio. It’s like the foundation of their profile, similar to forex. In addition, according to experts, you should start trading or investing in stocks as soon as possible, so that you can invest bigger later on.
If you want to know the steps in buying stocks for the first time and some tips on how to trade shares, you should check the list below!
1. Choose a broker and open an account
When buying stocks or any other investments, you need to look for a broker first. However, when looking for a broker, there are things you need to consider. First, they’re credible. Next, if they offer the things you need for trading. And lastly, if they have great customer service.
Once you find the best broker, open an account. It doesn’t have to be a direct trading account. You can start with a demo account, and see if they have all the features they told you they have.
After trying and confirming the platform, you can now open an account. Usually, you need to prepare some requirements and important information before the broker approves your account.
2. Do research on shares or stocks before deciding
Before getting started, you should know the specific shares or stocks you want to trade. If you want to pick the best ones, you should do some research. You can start with the most popular companies, and work your way to the others.
Even if you’re planning to try trading at first, it’s best to invest in your preferred stocks. In terms of trading, there are many online resources on how to trade shares that can guide you as a beginner.
Once you decide on the shares or stocks to trade, you can start funding your trading account. Make sure you read the terms and conditions of the broker before getting started.
3. Determine the number of shares to buy
Are you still unsure about the number of shares you’re going to buy? But first, you need to decide on the budget. Of course, determining the budget must be the basis of the number of shares you’re going to buy. Even if you determine the number of shares, if you don’t have the fund, you can’t buy them.
However, your budget shouldn’t be the exact amount you’re going to use for buying. It’s because other fees might need to pay once you start ordering or paying.
When it comes to budgeting depending on the number of shares, for instance, if you have a $1000 budget, find out how many shares or stocks you can buy with that money. You can contact your broker to see trading options.
4. Set your goals
Are you planning to start trading soon? Well, as exciting as it may seem, you need to set your goals first before diving into the world of online trading. But before setting your goal, you should know yourself first.
What kind of trader are you? Are you confident that you already know how to trade shares? What is your target profit for a certain period?
If you have goals in mind, you can write them down one at a time. In addition, having a guide in your trading journey will help you trade efficiently. So once you set your goals, you need to stick to them and revisit them once in a while to see if you’re still on track.
5. Plan the order type and place the order
Are you ready to make your first order? Before that, you need to plan the order type first. The order type usually lies between the market order and the limit order.
The market order is when you ask your broker to buy the shares or stocks without any restrictions on the price. On the other hand, the limit order is when you ask your broker to get you the stocks depending on the price limit you set. For instance, if the price of a certain stock is $30 per share, and you set your limit at $25 per share, then the broker will wait until when the price of the stock per share is at your set price.
6. Repeat, and keep building your portfolio
The last step when buying stocks is to keep on buying and trading. It’ll help you build your portfolio in the long run. Of course, at this time, you already know how to trade shares, so it’s easier than the first time.
Being familiar with the process of buying stocks and shares will help you trade more often. So once you get it, don’t be scared to try again.
Are you ready to buy your first stocks or shares? Don’t forget to share your experience by leaving a comment below!
ABOUT THE AUTHOR:
Aliana Baraquio is a web content writer at FP MARKETS, a global Financial Technology services Foreign Exchange (Forex) and Contracts for Differences (CFD) broker established in 2005. She also loves reading about interior design and home makeovers.