How to Buy Shares: A 6-Step Approach from a Professional
Buying shares online is not rocket science. Follow this simple six-step plan:
- Find a good online broker
- Open a brokerage account
- Upload money to your brokerage account
- Find a stock you want to buy
- Buy stocks
- Review your share positions regularly
Step 1: Find a good online broker
First of all, you need to find a good online broker. BrokerChooser will help you here: get a free recommendation by answering just a few questions, or read further to get a general broker recommendation.
When recommending a broker, we take into account the broker’s fees, stock prices, trading platform, accessible markets to trade, and how easy it is to open an account. Safety is also very important, but since we recommend only safe brokers, you don’t have to worry about this.
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Step 2: Open a brokerage account
After finding your online broker, you need to open an investment account to begin trading. This can usually be done online. The investment account is basically what you need to start buying stocks online. Think of it as a bank account where in addition to holding cash, you can also hold shares. Opening an online brokerage account usually takes a couple of days, although at some brokers you can get it done within a day.
Step 3: Upload money to your brokerage account
In order to buy and sell shares online, you need to have money on your investment account.
Minimum deposits can be as low as $20. At some brokers, you can buy fractional shares, so if for example one Amazon share is priced over $2000 and you only want to invest $500, you can still do it.
Usually, you can choose between a bank transfer (ACH) or depositing funds via credit/debit card. At some brokers, you can fund your investment account even via Paypal, e.g. at eToro.
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Step 4: Find a stock you want to buy
You can get inspiration from others’ ideas or you can do your own research. For example you could choose to buy into some stocks that Warren Buffett owns. On the other hand, if you put some time and energy into your own stock research, you can learn a lot more from it. Investment ideas can come from your broker in the form of stock reports and analyses, but you can also use independent research. The financial news and investment courses can also be useful in learning how to pick a winning stock and the suitable stock market.
You may consider using a stock screener. WallStreetZen, for example, doesn’t only just show financial data but helps users interpret the data and understand the context.
Step 5: Buy stocks
You have the account, the cash, and the stock you want to buy. Now all you need to do is press the ‘Buy’ button. You log in to your online trading platform, find the stock you have selected, enter the number of shares you wish to buy, and click ‘Buy,’ which will initiate the purchase of shares. Alternatively, you can also just select how much you’d like to spend on the given stock.
When placing an order, you can choose from different order types, e.g. market order, stop order or stop limit order. A market order buys immediately at the current market price, while a limit order allows you to specify the exact price at which you want to buy the shares. Find more details on order types here.
Step 6: Review your share positions regularly
You’re done, you’ve bought the shares, they are yours. Now it is key to monitor your investments.
If you bought the shares with the goal of holding for a longer term, you don’t need to check the price movements every day but you might want to check the quarterly or yearly reports and company guidance. This basically means reviewing your investment strategy from time to time.
For short-term buyers, position management could mean setting up a stop-loss price of where to cut losses, and the target price of where you want to sell stocks, while making a profit.
Now that you have mastered the 6 steps of buying shares, take a moment to look at the top 5 brokers we have selected for you.