How To Trade Stocks

Ready to jump into the stock market? Awesome! The first thing you’ll need to know is how to trade stocks.

In this article we’ll look at what you need to have in place in order to buy and sell a stock. Plus, some other basic info that’ll help you save money when trading stocks.

How To Trade Stocks

The first thing you’ll need is an account where you can put some money you’ll use to buy/sell stocks. Here, you have 2 main options.

Use a Stock Broker

First option is to open up an account with a stock broker. Then your broker will take care of your buying and selling for you. This makes it super easy cuz you don’t have to know what you’re doing.

This is the easy option. However, it comes at a cost. Literally.

Using a stock broker to buy/sell stocks will cost you more than if you did it on your own. Because the broker is providing a service and gets paid for it by charging a commission on your trades.

But every commission you pay to a broker means less money in your pocket. And since we’re all about building YOUR nest egg here, we’d recommend you go with option 2.

Open a Self Serve Brokerage Account

Option 2 is to open an account with a self serve brokerage. These are firms like TD Ameritrade, Etrade, Fidelity and Charles Schwab.

In this case, you open an account online. Then you put some money in it. Then you can log into your account, select a company to invest in, choose how many shares you want to buy and make your first stock purchase!

Many of the self serve brokerages have $0 trades for clients these days so buying/selling a stock won’t cost you a penny!

Also, some of these brokerages like Fidelity and Schwab do have brokers you can turn to for advice or help on trading. So, if you need it, they can hold your hand as you get started with trading stocks to make sure you are doing it right.

Some Tips On Making Your First Stock Trades

  • When you first start trading stocks, stick with larger, well-known companies. Think of businesses you use and admire and invest in some of those. Companies like Amazon, Apple, Google, Disney, Home Depot, Nike or Wal-Mart are some good examples.
  • Only invest money you can afford to lose.
  • Think long term. Day trading or shorter term trades is more advanced. You can certainly learn more and get to that point. But, when starting out, invest in companies you think will perform well for 1, 5, 10 years or more.
  • Don’t sell in a panic if your stock(s) drop in value. Stocks go up and down. Keep your emotions in check. If you believe a company will do well over the long term, just ignore the short term ups and downs of a company’s stock price. In fact, if a stock you own drops a bit, consider picking up a few more shares (assuming you still believe the long term success of the company).