How to Make Your First Stock Purchase

Summary

So, you’re looking to get into the world of buying and selling stocks, are you? Well, there are a couple of things that you will need to know first. In order to begin buying stocks, you will have to take a couple of steps.

Step One: Setting up an Account with a Broker-Dealer

The first thing that you have to do in order to actually be able to make trades is to set up an account with a broker-dealer. Schwab, Tradeking, TD Ameritrade, Fidelity, and other broker-dealers are all places where you can go to set up an account. Usually, these groups will want some personal information from you in order to complete the account set-up process. This could include things like your yearly income, amount of debt outstanding, birth date, social security number, and other personal identifiers.

The account set-up process is technically an application, so there is a small chance that you may be denied the opportunity to set up an account, but this almost never happens. If it does, you should first consider why it was that you were denied (as the SEC requires all broker-dealers to give a reason) and then consider whether or not you should attempt to apply with another broker-dealer.

Step Two: Choosing Which Stocks to Buy

Assuming you were able to get an account set up online, the next part is the fun part: choosing which stock(s) you are actually going to buy.* Usually, your broker-dealer will have a variety of research tools available at your disposal, or you can just commence with doing your own research. Generally speaking, you will want to look for companies with proven business practices, continued excellence, great potential, and that have increasing company earnings year after year.**

Step Three: Locating the Ticker

Once you have decided what stock(s) you want to buy, you will need to locate the “ticker” symbol for that stock. This is usually a one-to-four letter identifier that helps the broker-dealer identify what stock you would like to buy. For example, Ford Motors has the ticker symbol “F”.

Step Four: Completing the Stock Purchase

After you have found the ticker symbol, you can take it to your online dealer’s web portal and enter it into their purchase section. Usually, this will be the easiest section of the site to find, because the broker-dealer will want to make it easy to find since they are making a commission on every trade that takes place through their portal.

You will need to enter in the stock that you want to buy, how many shares of the stock that you would like to buy, and you can choose to either buy at market price or set a limit price. A limit price is the price that you are willing to buy at. In other words, if the stock price never hits your limit, you will not buy the stock.

*As always, please consult with your financial advisor before making any investment decisions.

**According to some of the best analysts in the world, most financial market analysts contend that having a stock portfolio with twenty or more stocks should help to eliminate risk that would arise if your portfolio was not diversified.

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