Buying Stock Online
Step by step guide to buying stock online
Buying stock online can be a satisfying and trouble free exercise if you know what you are doing. However, novice online traders can easily end up doing things in the wrong order or missing out steps. The following is a step by step guide on how go about purchasing online stock for the first time:
Step 1: Select an online broker or trading company and open a trading account
- Following the guidelines in 'choosing a good broker', select the online broker or trading company that is best suited to your individual needs.
- Open an account with your online brokerage firm of choice. In order to do this you will need to download an application form and fill in your personal details as well as bank account information. You will also need to create a user name and password for your account.
- Once you are registered with a company they will send you detailed forms to fill out and return. These will usually need to be sent back with proof of identification and funds to open your account with in the form of a cheque.
- Your forms will usually take about two weeks to process. Once your application has been approved you will be sent a confirmation form and a welcome pack. Your password will then be activated and you will be able to start buying stock online.
Step 2: Research, research, research
- Before you contemplate buying stock you will need to decide what stock you want to buy. This can only be achieved by extensively researching the performance of stocks on various markets.
- Most online trading companies supply their clients with up-to-date market information. Determine if the data and quotes you are receiving are on real-time or delayed time. This will have a significant effect on your decision to buy or sell shares.
- Decide exactly how much money you want to spend and how much stock you will be able to get for the price that you are willing to pay. Keep in mind that share prices may work out to be more than the prices you are quoted due to delays between ordering and actual purchasing. Also, remember that you will probably pay commission on every deal. Make sure that you leave some money in your trading account because if your purchase costs even one cent more than the balance in your account then it will not be executed.
Step 3 : Let the buying begin
• Once you have decided which stocks you would like to buy and how much you are willing to pay for them, you will need to find the EPIC code of the stock you have selected. This is the abbreviated name of the stock in question as it is used on the trading floors. There should be a link to this information on the trading site that you have chosen.
• Select the TRADE option or BUY/SELL option which should be listed in the menu on the trading site.
• Once you have entered all the required information, you will have the option to preview the purchase you have selected. Check all the details carefully, from the type of shares you have selected to the amount of money you are spending and the EPIC code of the stock.
• If you are satisfied with your purchase, click the buy button. Make sure that you click this button no more than once or the transaction will fail.
• Provided you have entered all the information correctly and the broker is able to electronically purchase the shares you have specified, the trade should be executed. You will then receive a message confirming your purchase.