February 25, 2020 Last updated March 3rd, 2020 287 Reads share

Buying Stocks Online

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When you are buying stocks you need the help of a stockbroker. It is in order to ascertain that the said stockbroker is an individual licensed to buy stocks on your behalf. This is crucial to avoid being duped and also to negate problems with the relevant authorities.

However, before making a resolution on a stockbroker you need to determine which stockbroker is the most appropriate for you. There are four primary classifications of a stockbroker. These are: 

  • Online stock brokers
  • Discount stockbrokers
  • Full-service stockbrokers
  • Money managers

This discussion will focus on online stock brokers and how to buy stocks online. Buying stocks will make you a bona fide part owner of an organization. Buying stocks online can be done either on commission or commission-free, depending on personal preference. Technological advancements are making it simpler to buy stocks as businesses battle to lower the cost of buying stocks online.

Steps of Purchasing Stocks Online

Open an Online Brokerage Account

Opening an online brokerage account is equivalent to opening a bank account it is easy. The requirements are to complete the account application, provide identification details and select the mode of funding the account which could be either electronically or by mailing a cheque.

There are considerations to opening an online stocks account they include commissions; the stipend charged by a broker for buying or selling stocks on your behalf. Select a stockbroker who charges little to no commissions and provides the support you want. This is crucial for new investors as you want intelligent customer service attendants to respond to your queries.

Select the Stocks You Want to Buy

Once you have initiated and endowed your brokerage account, you then select the stocks you want to purchase. The ideal place to start is by looking at existing companies that you know of as an investor, for instance, Saxo bank.

When combing through data and the options available keep the objective simple. The objective is companies that you will become a bona fide part owner of. One of the world’s most shrewd investors; Warren Buffet is quoted saying “buy into a company because you want to own it and not because prospectively the stocks will go up.”

Make a Decision on the Number of Stocks to Purchase

When buying stocks for beginners it is crucial to start small as this gives you an idea of what it feels like to be part owner of a company and whether the strength to go through the difficult times without giving up.

There are certain aspects that are to be considered before deciding on the stocks to buy such as the cost of the shares, diversifying your stocks portfolio, the price per share of prospective shares you intend to buy and other savings as well.

Select Your Stock Order Type

There are a couple of stock orders types’ available including a market order, limit order, stop-loss order, and stop-limit order. The two main stock order types available are market order and limit order.

A market order is an application to buy or sell stocks as soon as possible and at the best obtainable levy.  A market order puts no limiting factor on price and your order will be processed instantaneously, whereas a limit order is an application to buy or sell stock only at a specific rate or better.

Optimize Your Stock Portfolio

Portfolio optimization is the procedure of selecting the most appropriate portfolio out of all other portfolios that are being considered. Of importance to investors with regards to optimizing stock portfolio is investment objectives, risk tolerance, time horizon, and available finances to invest as a starting point of asset constitution.

 Conclusion

To sum it all up, when buying stocks online make sure you have the best available tools, be mindful of brokerage fees as they can have a negative impact on your returns, and consider backing mutual funds because they allow you to buy as many stocks as you want in a single transaction.

 

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Gabriel Gonser

Gabriel Gonser

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