How to buy shares for beginners?
- by Kate Doob
Buying shares as a beginner may seem overwhelming and complicated, but the process is actually very simple. The following information will walk you through buying your first shares.
First, find a broker by searching online for a low commission brokerage firm. You can also try asking friends and family if they know of one. Once you have chosen your stockbroker, it’s time to open up an account. To do this, you’ll need to provide your name, address, phone number, and social security number, as well as a good form of payment such as a check or credit card. Now that you have an account, it’s time to buy some stock—but what do you buy?
Research which stocks are best for you:
Do you need a company that pays dividends? Are you looking for a blue-chip stock or a high-tech growth company? Once you have your criteria set up, start researching specific companies. You can do this by looking at the various stock quotes in the newspaper, Internet, or buying mutual funds. If you buy a mutual fund, you can distribute your money among several different stocks.
When you choose a particular company, it’s time to do some research before buying any shares. Many companies share their annual reports and send newsletters to their stakeholders. You can refer to those reports and also see real market-based data going back at least 6 months.
Learn how to use the application provided by your stockbroker:
Don’t ignore the tutorials and any helpful material provided by your broker. Mastering this trading application is a must for successful trades and analysis in the future.
If you have done your research and chosen a company to invest in, it’s time to add it to your portfolio.
Purchase the shares you want:
You will need to log in using the username and password created when you opened your account. Typically, an option is available for “Buy Shares” or “Place a Trade.” If you click that, a list of available stocks will come up. Highlight the appropriate stock and press “Buy Shares” to add it to your portfolio.
Once you have added the stock, you can decide how many shares you want to buy. Use the current price of each share, along with the total commission amount from your stockbroker, to determine how many shares you can purchase. Shares are usually sold in blocks of 100, called a “lot.”
Click “Place Order” or “Submit Order” to order your shares. Remember that it might take a few days to fulfill your order. Once it is, a confirmation will be mailed to you with the trade status and any other information you might need.
Congratulations! You have now purchased your first shares! Now that you know how to buy shares for beginners, what’s stopping you from getting started?
How many shares to buy?
You know how to place an order or buy the shares; as a beginner, you may need to start low and slow. It is always best to start with a test purchase and see how your predictions or understanding of the market work. Nowadays, fractional shares are also offered. It is particularly beneficial for beginners in the stock market. You can use fractions to buy less and learn about the whole process.
Some valuable terms you should know in the stock market:
Stockbrokers use their own lingo to describe different processes in the stock market. Here are some of the most commonly used terms and their meanings:
What is the “Bid” amount?
In the stock market, “Bid” means the highest price a buyer is willing to pay for a particular stock. The “Bid” will be higher than the current market price because buyers are willing to pay higher prices if the stock is in greater demand.
What is the “Ask” amount?
In the stock market, “Ask” means the lowest price at which a seller of a particular stock is willing to sell the stock. The “Ask” amount will be lower than the current market price because if more sellers are offering a stock, they will need to lower the prices.
What is a “Put Option”?
In the stock market, a “put option” is an agreement between two parties in which the buyer of the contract would have the right but not the obligation to sell certain securities at a pre-determined price on or before a certain date.
What is a “Call Option”?
A “call option” is a contract between two parties in the stock market. The seller of the contract would have an obligation to sell certain securities at a pre-determined price on or before a specific date.
What is a “limit order”?
In the stock market, this means that an investor requests to buy or sell shares at a specified price or better.
What is “Market Order”?
In the stock market, this means that an investor requests to buy or sell a share as soon as possible at the best price available.
What is a “Short Sale”?
In the stock market, this means that an investor expects the price of a particular stock to go down. This is when they borrow shares from their broker and sell them immediately in the market, hoping that they can buy them again at a lower price and keep the difference as profit.
What is a “Limit Order”?
In the stock market, this means that an investor requests to buy or sell a security at a specified price or better.
What is a “Stop Loss” Order?
A Stop Order or Stop Loss is when an investor requests to buy or sell a stock when the price reaches a certain level. This is useful in preventing an investor from losing too much money.
Shares are one of the most attractive and rewarding investments to make for beginners. Shares can be very easy and enjoyable to invest in while also volatile and risky; we recommend that traders only use the money they can afford to lose. As a new trade,r you may want to get started with fractional shares and via a stockbroker’s trading platform.
Buying shares as a beginner may seem overwhelming and complicated, but the process is actually very simple. The following information will walk you through buying your first shares. First, find a broker by searching online for a low commission brokerage firm. You can also try asking friends and family if they know of one. Once…