The Internet and electronic communications networks (ECN) have made it possible for individuals and families to invest in stock alongside institutions and professional traders. Anyone with an Internet connection and a bit of money to play with can take part in this exciting, potentially lucrative investment activity. Understanding the step-by-step process of investing in stock can help you to jump right in and begin trading quickly.
Save at least $500 — that you can afford to lose — before opening a stock-trading account. Save several times that amount if possible; $500 is the minimum set by most online trading platforms. The more money you use to invest in stock, the more you stand to gain. Putting more money on the line also leaves you with more to lose, however, so take care to choose an amount that is right for you.
Select an online trading platform, then open and fund an account. Compare all of the features of each platform, such as the amount charged per trade, the availability of personal advisors, smartphone applications and the inclusion of advanced research tools directly on the platform. Popular online trading platforms include Scottrade, SoGoTrade and TD Ameritrade.
Choose your first company to invest in. This is where the years of education and experience come into play, and this can be the most challenging step for beginners. Keep an eye on stock-trading news outlets to spot rising stars, and read analysts' opinions on individual stocks. Choose a fast-growing industry in which to invest, then compare the companies in that industry against each other to choose an ideal investment candidate.
Place a purchase order in your online trading platform. Specify the company that you wish to purchase and the number of shares. Purchase the shares immediately at the market price, or set a price point at which to buy at any time in the future.
Sell stock through the platform. Enter sell orders at the right time to sell a specified number of shares at the market price, or use limit and stop-loss sell orders to gain more control over your transactions. Limit orders will alert the system to sell your shares when the price hits a specified price point above the current price. Stop-loss orders work the opposite way, automatically selling when the price drops to a certain point.
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