The Basics Of Buying And Selling Shares
James Woolley
February 10, 2011
Playing the stock market with your own hard-earned cash can be quite a frightening prospect for a lot of people. However it can also be very exciting and a good way of making some extra cash. It's certainly better than putting your money in the bank where it will earn virtually zero interest every year. So let me explain how the process of buying and selling shares actually works.
Assuming you have never bought or sold any shares before, the first thing you need to do is go online and find a good stock broker. This is not an easy task because you will soon find that there are lots of different brokers to choose from, and they are all very similar in many ways.
I guess the difference between them is the actual transaction costs that they charge their customers. In other words the fee you have to pay to buy or sell a batch of shares. For example TradeKing, one of the most popular brokers you will come across (as they advertise on lots of financial websites and blogs), charge a flat commission of $4.95. They are regarded as a discount broker, but other brokers may offer lots of additional services as well, and will therefore charge a lot more than this.
The fees vary quite a lot and you may find that some brokers charge nothing at all. Indeed this is the case with Zecco. However before you get carried away, these rules only apply to investors who place a lot of trades every month and those who maintain a high balance every month. Not everyone will qualify for these free trades.
Anyway once you have weighed up your options and chosen a suitable broker, you can then go through the application process. After a short period of time your account will be open and you can then start depositing some money into your account.
It is then quite easy to buy shares. All you do is log in to your account and look for the relevant link. Then you will be requested to enter the details of the transaction. So you enter the epic code of the stock you are buying and the amount you wish to invest. You may also have the option to enter the number of shares you wish to buy, but I personally prefer to enter the cash amount (and stick to nice round figures).
Then you simply press the confirmation button and the transaction should go through straight away. On occasions you may have to wait for a deal to be manually confirmed and placed for you by a dealer, but this only really applies to some of the small-cap stocks that are lightly traded.
So as you can hopefully see, the whole process of buying and selling stocks is a very easy one once you open an account with a broker. The difficult part is of course coming up with a profitable investment strategy and picking the right stocks, but that is a whole different subject.
Assuming you have never bought or sold any shares before, the first thing you need to do is go online and find a good stock broker. This is not an easy task because you will soon find that there are lots of different brokers to choose from, and they are all very similar in many ways.
I guess the difference between them is the actual transaction costs that they charge their customers. In other words the fee you have to pay to buy or sell a batch of shares. For example TradeKing, one of the most popular brokers you will come across (as they advertise on lots of financial websites and blogs), charge a flat commission of $4.95. They are regarded as a discount broker, but other brokers may offer lots of additional services as well, and will therefore charge a lot more than this.
The fees vary quite a lot and you may find that some brokers charge nothing at all. Indeed this is the case with Zecco. However before you get carried away, these rules only apply to investors who place a lot of trades every month and those who maintain a high balance every month. Not everyone will qualify for these free trades.
Anyway once you have weighed up your options and chosen a suitable broker, you can then go through the application process. After a short period of time your account will be open and you can then start depositing some money into your account.
It is then quite easy to buy shares. All you do is log in to your account and look for the relevant link. Then you will be requested to enter the details of the transaction. So you enter the epic code of the stock you are buying and the amount you wish to invest. You may also have the option to enter the number of shares you wish to buy, but I personally prefer to enter the cash amount (and stick to nice round figures).
Then you simply press the confirmation button and the transaction should go through straight away. On occasions you may have to wait for a deal to be manually confirmed and placed for you by a dealer, but this only really applies to some of the small-cap stocks that are lightly traded.
So as you can hopefully see, the whole process of buying and selling stocks is a very easy one once you open an account with a broker. The difficult part is of course coming up with a profitable investment strategy and picking the right stocks, but that is a whole different subject.
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