How to Buy and Sell Stocks as a Beginner

One of the challenges those who intend to delve into the stock market face is how to buy and sell stocks. This is most often a challenge that makes investors go elsewhere with their money.

Because you can't just phone a stock market and ask to buy stocks directly, you'll almost always need the help of a stockbroker to buy stocks.

You can choose the investment you want to buy or sell and how the trade should be conducted when you employ a stockbroker, whether a human or an internet platform.

In this regard, there are two types of brokers to consider: full-service brokers and online/discount brokers.

Using a Full-Service Broker to Purchase Stocks

Some people envision full-service brokers when they consider investing. Well-dressed professionals sitting in an office conversing with clients.

They are the conventional stockbrokers and they will spend time getting to know you personally and financially.

They'll consider things like marital status, lifestyle, personality, risk tolerance, age (time horizon), income, assets, obligations, and other things.

These full-service brokers can help you establish a long-term financial plan by learning as much about you as possible.

These brokers may assist you with not only your investing needs, but also estate planning, tax counseling, planning for retirement, budgeting, and any other form of financial advice, thus the phrase "full service".

They are for investors who want everything in one package and can help you handle all of your financial demands now and in the future.

Full-service brokers are more costly than discount brokers in terms of prices, but having a professional human investment manager on your side might be well worth the extra money.

Accounts can now be opened for as low as $1,000. In terms of the type of stockbroker they require, several people, especially newbies, would fall within this category.

Online Stock Purchases

On the other hand, online/discount brokers do not offer investment advice and are just order processors.

Because there is often no office to visit and no registered financial consultants to assist you, they are far less costly than full-service brokers.

The cost is normally calculated per transaction, and you may easily start an account with little or no money through the Internet.

Once you've opened an account with an online broker, you may usually buy and sell stocks immediately by logging into your account on the broker's website.

Understand that you're on your own to handle your assets because these sorts of brokers offer no financial advice, stock suggestions, or other investment assistance.

Technical help is frequently the only assistance you will obtain. Investment-related information, research, and resources are available through online (discount) brokers.

This is the route to follow if you believe you are skilled enough to handle the responsibility of managing your own assets, or if you don't understand anything about stock investments but you are willing to learn.

Which of the two is best?

The truth is that your broker selection should be based on your specific requirements.

Full-service brokers are ideal for consumers who are willing to pay extra to have their finances managed by someone else.

Online/discount brokers, on the other hand, are ideal for consumers who have limited starting capital and want to take on the challenges and benefits of investing without the help of a professional.

Using a Direct Stock Purchase Plan to Purchase Stocks

Enterprises, such as blue-chip companies will occasionally sponsor a unique sort of program known as a direct stock purchase plan (DSPP).

Direct stock purchase plans were created generations ago as a mechanism for corporations to allow smaller investors to purchase direct ownership from them.

A DSPP requires an investor to deal directly with a firm rather than through a broker, but each company's system for managing a DSPP is different.

The DSPP will be offered by participating corporations through transfer agents or another third-party operator. An investor should reach out to the company's investor relations department to learn more about how to join the DSPP.

How to Trade After Getting a Broker

After you've decided on a brokerage platform, you'll need to open an account and fund it before you can start trading.

It's now easier than before to link a bank account and move money online, or to roll over an established brokerage account to another company electronically.

You can also decide to make periodic contributions into your brokerage account to steadily grow your portfolio.

To place a transaction, just go online or call your stockbroker after you've funded your account. A unique ticker symbol, a one to four-letter mnemonic assigned to a certain corporation, is used to identify stocks.

For example, TSLA is the ticker for Tesla, Inc, AMZN is for Amazon.com, Inc, and NVDA is for NVIDIA Corporation.

When you choose a stock ticker to trade, you'll be presented with a price quotation, which is a compilation of data about the stock's price and activity.

The last price at which the shares were traded, as well as a bid and an offer, will be displayed. The bid is the highest price at which a market participant will purchase a share, and therefore the best price at which you may sell to them.

The offer, also known as the ask, is the lowest price at which a market participant is willing to sell, and thus the best price at which you may buy from them.

The spread is the difference between the bid and offer prices.

A narrower spread usually suggests that the stock market is more active and liquid. 

A greater spread denotes the inverse. You may place your purchase after reviewing the price quote.

Market orders are the simplest type of order and will be executed immediately at the current market price.

A limit order, on the other hand, permits you to purchase or sell at a fixed price. The deal will stay open until it is canceled if the price never reaches the limit level.

Many of these deals are day orders, which are valid until the close of the trading day.

If you only want the order to be active for a short time, tell your broker to make it immediate or cancel it (IOC).

Alternatively, you can specify the order as good 'til canceled (GTC) if you want it to last longer than a day. Other restrictions, such as a stop-loss, can be added to an order.

You will receive a fill, which is a summary of your order's details, whenever your trade is executed in whole or in part.

Where to buy Stocks

Stocks are usually listed and traded on exchanges, which are regulated marketplaces where buyers and sellers meet, frequently with the help of a broker or other intermediary.

These middlemen will be exchange members who will use their direct connections to buy and sell shares on your account.

The New York Stock Exchange (NYSE) and the Nasdaq market are two major exchanges in the United States.

Smaller companies with less liquid shares and low market capitalizations which are sometimes known as penny stocks can trade over-the-counter (OTC) on less regulated venues like the OTC Pink Sheets.

Because the shares of these firms are often more volatile and dangerous, investors who choose to trade on the OTC market should conduct more due diligence and be aware of the risks.

Conclusion

By creating a brokerage account with one of the many brokerage firms that exist, you can purchase and sell stock on your own.

Link your brokerage account after you've opened it to your bank checking account to make payments, which will then be available for you to invest in.

Do not, however, mistake the ease of creating an account for the ease of making sound investing selections. Beginners are advised to seek the advice of a certified financial consultant.