The stock market can seem like a complicated place, and when first considering buying stock it can seem overwhelming and raise a lot of questions. How do i trade on the stock market? What broker to choose? What stock should i buy? On the other hand, it can be seen as something very easy. Simply buy low and sell high.
The truth is somewhere in between. The actual buying of stock is easy in today’s market. You can simply setup and account with your regular bank to trade stock, or register with a more specialized stock broker. I will write more about how to buy stock further down. The harder part is to know what to buy and when.
About information
The stock market is basically a game of information. The more information you have, the better calculations and prognoses you can make. As a small time investor that simply wants to invest a part of your hard earned savings in the stock market, it will be difficult not to say impossible to keep up to date with all the financial news. A good option might be to chose a few stocks and keep up to date with those companies.
Recommendations
Another options is to read recommendations and analysis from financial companies and base your decision on those recommendations. You should however know that the recommendations are not always right; they are simply a forecast based on the opinions of one professionals in the field. Some sites will give you an overview of different forecast so that you can see what different professionals and companies have to say about a share. If a stock has a lot of recommendations to sell and one to buy you might want to consider the value of the recommendation to buy.
Always remember that investing in the stock market is associated with risk and that you can loose all money you invested in a stock if the company goes bankrupt. This is uncommon in larger corporations but it can happen.
Trading account
To buy a stock you need a stock trading account with your bank or with a stock broker. Once you have register this account you need to add funds to it to be able to trade stocks. If you trade stock through your regular bank it is common to tie one of your regular accounts to the brokerage account so that money is taken from there when you buy stock and deposited in there when you sell.
Once you have your account and have decided what stock to buy, it is time to actually buy the stock to do this. You can usually do this through a web interface or other electronic platform. If this is not available to you, you need to call your broker.
In the trading platform, choose the stock you want to buy and enter the number of shares you want to buy. You can either buy them at present market price or you can put a limit on the order. A limit is the highest price you want to buy the stock for (or lowest you want to sell for) . This limit can be below current market price. If it is, the order will only go through if the price declines. You should also decide whether you want to place a regular order or a fill-or-kill order. A fill-or-kill transaction will not be conducted unless all of the shares you want can be purchased. If you choose to submit a regular order it is possible for it to end up only partially filled. Once all this is done, you should decide for how long you want the order to be valid. After this you can submit your order.
Depending on your limit, order size, volatility in the stock and a few other factors, the order can be filled almost instantly, after a few hours or not at all.
Good luck trading.