How to buy stocks – Step by step guide
How to buy stocks is the question that is asked by the stock market beginners when they hear that the stock market is the best way to make money and also save for the retirement. I will try to outline all the methods of buying stocks though I must say that it is simple and easy to buy stocks online nowadays.
Go online and type in the search for the discount stock broker. We will worry about the stock research as that is the whole area of separate interest.
If you do not want the discount stock broker and want the stock broker who should do all the hand holding and also give you advice as to what kind of shares you should buy and also will call you three times a day telling to you to either sell a stock or buy a stock then go for the full service broker. These full service brokers will give of course charge a good amount as brokerage for his services offered.
Once selected then fill in the application form and the account will be opened for you.
How will you buy the stocks without the money and that is why it is necessary that you have the account funded and the way you do is by electronic transfer or the check. For electronic funds transfer you will have to set up the account accordingly and get the necessary checks done before setting up the account.
It is always better to go for the margin account also along with cash rather the discretionary one. The reason being that it is would be easier later for you to trade.
A lot of people ask the question about how do I buy the stocks myself and the answer is that if you want to select the stocks yourself and buy the stocks yourself then open a brokerage account with the discount stock broker.Another method which is less discussed nowadays is that you can invest in the stocks of the company directly by doing what I think is relatively less easy and that is buying the stock from the company directly. There are a lot of companies which offer stock sale program which is more like a monthly scheme and you will end up with the said company stock without going to a broker.
Then the indirect way of investing a stock and the share market is that you buy the mutual funds from the mutual fund companies. But for that you still have to open a brokerage account of an account with the mutual fund company whose mutual fund you are going to buy. Every time you buy the mutual finds you will have to pay some amount as the fees to company. This is applicable when you are selling too. To avoid that you should be able to buy no load mutual funds but that is a whole different set of ball game.
Before I go further I must tell you that the procedure that I am told you above is more of the where to buy the stocks. In fact how to buy stocks should actually mean how to select the stocks. That will mean that you need to know all about stock market investing.The first thing that you should know about is the stock market exchanges and the definition of NASDAQ and the Dow Jones index. Then you should know all about the stock market analysis and the types of research which is the fundamental research and the technical analysis.
Once you have found out about the stock that you need to buy then you need to thing about a trading strategy and that can be day trading or the long term trading strategy.Coming to type of shares there are so many different type of stocks that are out there that is virtually impossible to list out here but then you can buy the simple stocks or the index stocks or the penny stocks or the blue chip stocks.
Then the classification is also based on the market capitalization and you can buy the large cap stocks or the small cap stocks or even the junior gold stocks.
Before starting to invest in the stock market you should make sure that you read the best books for the stock market investors and these are from the stock market gurus like Benjamin Graham, Warren Buffet and Peter Lynch.
Always have the trends watched on and that will mean reading the best stock and financial newspaper like the WSJ and the Motley Fool guide. There are some good trends like the momentum stock investing or the pump and dump stock market investing in penny stocks or even the trend towards socially responsible investing in green stocks. Then a lot of people work towards building a dividend stock portfolio or the defensive stock portfolio.Learn everything about building a stock portfolio and that will mean that you will need to what is diversification and what are a beta and an alpha. That brings to my next point about the stock market terminology and you will need to know everything about stock market terms.
Related posts:
- Best penny Stock Pick – Step by step guide for selection
- How to buy stocks online
- Get rich off the mutual funds
- Trading Stocks – How & Where to Buy or Sell?
- Brokerage Accounts – Cash,Margin or Discretionary
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