Posted on 20 August 2012.
How to buy stocks online is a lot easier than many individual investors believe. In fact, in many ways how to buy stocks online is a lot easier than how stocks were purchased before the Internet existed. The days of high pressured sales by stock brokers, or stock brokers talking individual investors out of buying a stock, are over. Buying stocks online is faster than going through a stock broker and leaves the decisions to buy and sell stocks solely in the hands of individual investors.
Before stocks can be purchased online, an investor must open an online stock brokerage account with one of the many online stock brokers, such as Fidelity Investments, TD Ameritrade, or E-Trade. While many of the online stock brokers have similar pricing structures, it is important to consider the type of online investing or trading you anticipate doing before deciding upon which online stock broker to open an account with. Some online stock brokers are more suited to the needs of long term buy and hold investors, while others are more suited to the needs of short term stock traders or penny stock traders.
While online brokers offer a lot of services, the most basic thing that investors or traders that are new to using online brokers need to know is how to buy stocks online. Most online stock brokers offer market and limit stock buy orders for a flat fee of $10 or less. A market order is an order to buy a stock at the current trading price, while a limit order is an order that specifies the exact price at which you wish to buy a stock, and will not be executed until that price is reached.
First, log into your online brokerage account. There will be an area of the screen dedicated to entering stock orders. An order to buy a stock will include the stock’s symbol, the number of shares, the type of order (market or limit), and the length of time the order will be in effect, which can be either for the day or good till canceled (GTC). Press the Submit button (or similar) and a summary of the order will be provided that you must confirm by hitting another Submit button (or similar) to accept. The buy order is instantly sent, via computers, to the market makers in the stock you are trying to buy. If you place a market order, your order to buy the stock will be filled at the available price at the moment the stock order is received. If you place a limit order, your order to buy the stock will be filled at the limit order price when the limit order price is reached (there is no guarantee that the limit price will be reached).
In a nutshell how to buy stocks online is quite easy. There are no brokers to second guess what stock you are buying or the amount of stock you want to buy. While learning how to buy stocks online is empowering for an individual investor, it requires discipline to perform the necessary research and due diligence on stocks before buying them online. Keep in mind that many online brokers have information about how to buy stocks online for users that are new to buying stocks online.
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