Thread: Learn How to Buy Shares and Improve Your Investment Skills

Buying shares online is getting popular day by day. Online brokers help you to buy and sell shares online. But to know how to buy shares, you also need investment knowledge. In this article, we will discuss both. Stay with us.

Investing money into the stock market is one of the most popular investment options around the world. With the advancement of technology, now we can trade stocks online. And day by day, online stock trading is becoming popular. Due to covid-19, online trading is getting more popular. People are searching for how to buy shares online.

But knowing how to buy and sell shares online is not enough for stock investment. You also need knowledge and skills to make money in the stock market. For that, you need guidelines.

In this article, firstly, we will discuss how to buy shares online. Secondly, we will walk you through an investment guide of the stock market.

Learn how to buy shares online
How to buy shares online
To know how to buy and sell shares online, one has to follow a few steps. Below we will show you the steps you need to follow.

Select a Good Online Broker
Before finding a good broker, you have to determine your investment or trading goals. It will help you to choose a broker that fits your needs.

For example, if you are new in the stock market, you will need a broker with a good support team and educational resources. It would be great if you do some practice trades before actual trades. By using practice account, you can have an idea of how to buy stocks. So the broker should have that facility.

And if you have some experience or are an expert trader looking for a new broker, you might need to have an advanced charting facility and conditional order option.

There are more things you need to consider to choose a good broker.

Choosing a good and safe broker is the most important criteria. It’s because there are a lot of unregulated brokers where your money might not be safe.

To find a safe stockbroker, you have to check their regulatory bodies. Check if any of these regulates the broker

• The European Securities and Markets Authority (ESMA)
• Financial Conduct Authority (FCA)
• The Financial Industry Regulatory Authority (FINRA) (For US Brokers)
• Securities Investor Protection Corporation (SIPC) (For US Brokers)
• Testing the broker’s platform before finalizing any brokerage is a good idea to know more about the platform.

Every broker gives a detailed description of the resources and tools they offer in their platform. But it’s a best practice to do a test to know more about the platform. Some brokers offer free sign-up. You can sign up for an account to access the platform’s quality and know if it fulfills your needs.

You also need to consider broker’s fees, the number of available markets for trading.

Also, check deposit methods, leverage, and margin before finalizing any broker. After considering all the above aspects, you have to choose a broker.

Open An Account With Broker
Once you are done selecting your broker, you have to open an investment account with them next. From this account, you will buy and sell your shares.

Your broker may offer different types of accounts. Choose one that fulfills your requirements.

Opening an account may take a few days, as they will vary in identity and address. Once your account is approved, you are ready to buy shares.

Your deposited money will be in this account. By using this money, you can buy shares of your preferred company.

Deposit Money to Your Account
Now you have an account with your broker. Now to purchase shares, you need to deposit money into your account.

The minimum deposit amount varies from broker to broker and account types to types. You have to deposit money according to your investment plans.

Every broker provides a wide range of deposit methods, i.e., bank transfer, debit/credit card, digital wallets like Skrill. Some brokers also accept deposits through PayPal.

Once you deposit money into your investment account with your broker, you are ready to buy shares online.

How to Buy/Sell Shares
Let’s see how to buy shares. Buying shares is easy. Once you decide which company shares you want to buy. Suppose you want to buy 100 shares of Twitter. The current price of twitter (17 May 2021) per share is $52.60. You will need 100×$52.60=$5260. If you have that much money in your account, you place a buy order on the broker’s platform.

Suppose twitter’s share price rises to $70 per share, and now you want to sell them. In the same way, you have to place a sell order of $70 of 100 shares. $70-$52.60= $17.40 profit per share. Your total profit would be 100×$17.40= $1740.

Your Investment Guide for Share Market
Investing money in the stock market is one of the lucrative yet risky businesses. Lucrative because the stock market allows you to make a lot of money if you have skills. Risky because you can lose all your money if you don’t possess skills and emotional control ability.

As legendary stock market genius Warren Buffett said,

“Risk comes from not knowing what you are doing.”
If you don’t have a good understanding of stock market investment, you are bound to lose money. We will give you a guideline so that you can understand what you need to do.

Let’s start.

Who Should Invest in The Stock Market?
Should everyone have some money invested in the stock market? The answer is No! If you have idle money that you may not need to pay for your daily bills, you can think about investing your money.

Stock market investment needs skills and knowledge. So if you are not willing to learn the art of investment, you should not come into the stock market. Even if you have a lot of money, still the answer is no.

The father of ‘Value Investing’ Benjamin Graham wrote in his book “The Intelligent Investor,”

“We urge the beginner in security buying not to waste his efforts and his money in trying to beat the market. Let him study security values and initially test out his judgment on price versus value with the smallest possible sums.”

If you are willing to study securities (stocks), you can invest in the stock market. There is no easy money in the stock market. Only the smart investors win here.

If you have enough income to run your household and don’t have any debt, you can think of investing money. Many people come to the stock market to make money so that they can pay their bills. It’s a very bad decision. Trading requires a stress-free mind. When you have pressure to make at least a certain amount of money per month to pay your bills, it will make you restless. As a result, you will lose money.

Set Your Goals
By now, you have already understood whether you should come into the share market or not. Now you have to set your goals. Do you want to buy shares to hold them for the long term? Or you want to be a day trader. Day trading means buying and selling shares within the same day.

For newbies, we would suggest you go for long-term holding. It’s good for mental health. Short-term trading is bad for developing discipline. Discipline is one of the most important criteria to be successful in trading. Day trading makes the traders, especially newbies, restless. It also requires high leverage, which makes the trading riskier.

How Much You Should Invest
Many think for a diversified portfolio, one may need to invest a lot of money. Yeah, it is good if you can diversify your portfolio. That’s why many suggest starting with $100,000. But I do not think it’s a good idea to invest a large sum of money when you are beginning.

One should invest big money once they start to understand investing more and more. It’s okay, to begin with, $5000 or even $1000. Yes, you will not be able to buy a lot of shares with that money but investing more money means more risk.

Spend a few years to see how much you have been able to grow. If you see you were consistent in profit-making, you can invest more money into your account.

What Shares to Buy?
It is the most difficult part of the stock market investment. You need to do some research before buying shares. Select a few shares and check their price, earnings, and growth rate.

If a share is already overpriced, do not buy it. Find shares that are underpriced and have good prospects in the future. Check how the company is doing financially over the last few years to understand the future prospects.

Technical analysis is also a good way to find a good share. You can learn technical analysis of the financial market.

You can study the book “Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications” by John J. Murphy.

What Not to Do
Rumors are very common in the stock market. You will often hear that share is going to the moon or that share is going to fall. Most of the tumors are not true. Buying shares by hearing rumors is the worst thing to do.

Don’t follow the crowd. As Warren Buffett said, “Be fearful when others are greedy, and be greedy when others are fearful.”

How to buy shares – Conclusion
As we have discussed so far on how to buy shares, brokers play an important role. Be watchful while choosing a broker. You shouldn’t jump into the stock market just because there is a huge opportunity to make money.

Please educate yourself about the stock market, then through yourself into it. Do not buy any shares out of assumption. If financial data or technical analysis do not support evidence, do not buy a share.

For more such informative and insightful articles, you can have a look at AtoZ Markets.