This article will explain for new investors how to make a stock trade online, start to finish.
The process of placing a stock trade can be broken down into eight steps which we have listed below. For new investors learning how to trade that do not have a discount broker we have an example of a trade ticket after the steps.
1. Choose whether to buy or sell.
The first step is always to choose what we would like to do, buy or sell shares of stock. Until shares are purchased they cannot be sold.
2. Insert Quantity.
Next we enter how many shares we would like to buy or sell in total. To calculate how many shares we can afford, simply take the total amount of cash currently in the account and divide it buy the stock's last price. So, if stock XYZ is trading at $10 and we have $1000 in our account we can then afford to purchase 100 shares of stock.
3. Insert Symbol.
The ticker symbol is what is input into this box to denote the company we are going to buy or sell shares of. For example Disney has a ticker symbol of DIS, Apple is AAPL, Microsoft MSFT, etc. If we are not sure of the company's symbol there is a link to simply search and find it out.
4. Choose Order Type.
Order types include Market Orders, Limit Orders, and Stop Loss Orders. Market orders buy or sell the desired shares immediately at the current market prices. Limit orders tell the broker to only buy or sell these shares if I can get $xx price or better. Lastly, stop loss orders are combined with a market or limit to tell the broker once $xx price hits, then trigger this follow up order. For new investors getting started we suggest simply sticking with market orders.
5. Choose Price.
This box is only filled in if we are using a limit order or stop loss order. Read the above or follow the links to learn more information about these types of orders.
6. Expiration, Special Instructions, Routing.
New investors should ignore these fields and leave them simply as their default values. These options give investors more control as to how long certain orders should remain active and how they should be filled.
7. Conditional Orders.
Conditional orders let investors pre-program their entry and exit strategies for the stock they desire. These orders can be effectively used for investors that cannot be at their computers during the day to place their trade. New investors should also ignore this option and leave it blank.
8. Reviewing and Placing the Order.
After the basic inputs have been made the "Place Order" button will appear and allow us to complete the order. By default a summary screen always appears once this button is clicked to summarize the order and confirm we have enough funds in our account. Once investors have experience and are comfortable with the trade ticket this confirmation page can be disabled.