How to Invest in the Stock Market Online

By Jay P. Whickson

  • Overview

    Investing in the stock market online isn't a difficult task if you know a few of the terms of the trade. You do the same thing that a high paid broker does for you, but you do them yourself. The cost for the transaction is a lot less than you'd pay if a broker assists you in the trade. Invest immediately once you learn the steps and the appropriate language.
    Finding the right stock is the hardest part of investing online.
    • Step 1

      Open a brokerage account online. They'll ask a lot of financial questions on the application, because the law dictates that they must. Don't worry about these. The brokerage house protects your information and doesn't share it. Choose a reputable company that has a reasonable cost per trade. When you select the brokerage house, evaluate your needs first and pick the one that fits the best for your situation (see Resources below).
    • Step 2

      Select the stock and learn the symbol. Each stock has a symbol that you use when you trade it. Before you trade stocks, you should learn as much about the underlying company as possible. If you got a hot tip over the fax, ignore it. Those are usually scams meant to drive up the price of a penny stock so the person that sent it gets a big profit. Use the information from financial websites to find the stability of the company or employ the use of the technical information usually supplied at your brokerage account site.


    • Step 3

      Decide the number of shares you want to buy. Normally, people trade in blocks of 100, but that shouldn't stop you from buying 10 if you believe in the company but can't afford more. When you buy stock online, you have to decide whether you'll sell the stock for a quick profit or follow a buy and hold strategy. Both strategies, short- and long-term trades, are good ways to invest, depending on your goal.
    • Step 4

      Insert your symbol and number of shares in the appropriate box. For this example, you'll click on "buy." Decide whether you want a market order or limit order. A limit order means you won't pay any higher than the price you indicate and might get it for a lower price. A market order means you pay exactly what the stock sells for at that moment. Limit orders prevent overpaying and paying more than you have in cash. Sometimes it doesn't hit the limit price and you don't get it at all. More seasoned investors use stops or stop limits that go into effect when the price hits a certain level, market on close or trailing stops that adjust for the market movement.
    • Step 5

      Click on the length of time you want your order open. Most of the time market orders close immediately, so either "day order" or "GTC" ("good until canceled") works. For limit orders, the length of time it takes to fill the order varies by the price fluctuation. If you're sure you want the stock at the price you listed, put "GTC" down. Usually, this keeps the order open for 90 days.
    • Step 6

      Leave the section blank for FOK or IOC. These mean "fill or kill" and "immediate or cancel." If you order "fill or kill," it means you won't accept partial filling of the order. "Immediate or cancel" does accept a partial fill, but only if it's done immediately.
    • Step 7

      Click on the "buy" button and wait for the results. Limit orders might take place immediately or take a long time. Usually you'll get results for market orders right away. You need to have enough money to cover the sale when the settlement day occurs. When you sell, you follow the same procedures, but you click "sell."
    • Skill: Moderately Easy
    • Ingredients:
    • Stock information
    • Online brokerage account

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