Stock buying is not as complex as many think. It involves few steps that even a novice can understand. You don’t have to be a tech savvy to buy or trade stock. You may encounter some unfamiliar terms which are simple if you can take time to study them.
What are the steps involved in stock buying?
Setup A Brokerage Account
Think of when you first opened a bank account. It was not that difficult, right? It is almost similar to setting up a brokerage account. This first step involves the following:
- Provide the requested information
- Provide means of identification
- Choose your preferred method to fund your account.
Factors to consider before choosing a broker
You have to research more about your broker of interest before you proceed to open a brokerage account. Not doing a proper check might not go down well with your investment. Below are few key things to consider.
Do they request inactivity fee?
If the answer is yes, then avoid such brokers
How much do they request as commission fee?
As a new investor, choose a broker that request the lowest commission fee. It will also be beneficial if you intend trading frequently. Commission ranges from $5 – $10 depending on the broker.
How much support can the broker offer?
Most brokers give beginners proper support and nurture them into pro traders. They provide numerous helpful materials including videos and stock trading research to educate beginners properly. Find a broker that can offer you real human support. One you can communicate with via phone or through live chat to learn more about stock-trading firsthand.
Choose Your Preferred Stock
Since you have funded your brokerage account, the next step is choosing of stock. Your knowledge of the company of interest and other light reading and researches you may have done at this point in time would be needed. Just as you research about the specs, performance on the road and a host of other features before buying a car, stock buying is similar. You need to be sure the stock of the company of interest is worth buying before investing.
What to do before buying any company’s stock
- Check their annual report to have a general view of what is taking place inside the company. You may come across details that will enable you to make the right decision.
- Evaluate the business using analytical tools on the website of your broker. Examples are conference call transcript, updates on quarterly earnings, SEC filings, and latest news.
- Seek your broker’s help. Most of them organize seminars to train beginners on how to conduct detailed research on any company of interest before buying their stock.
How Many Shares Are You Buying?
It is advisable to start small as a beginner and see if you can handle the challenge that comes with investing in the stock market. Let no one persuade you to use your entire life savings to buy stocks. Always have a backup plan; something to fall back to when the rainy day comes. As earlier said, it is advisable to start small and grow your investment gradually.
Select Order Type
The last stage is to select order. Once you have done that, it then means that you are now a real investor in the stock market.
The stock market is very dynamic. There is no guarantee you would succeed as things can change at any time. Most of the successful stock investors you see today may have had horrible experiences in the past. But they were able to record tremendous success at the end of the day because they never gave up. So if you are interested in buying stock, then follow the steps in this post.