Buying And Selling Of Stocks –
What Should You Know?
When you do not know much about investments, it is better to take help of a professional financial planner who will help you in this matter. However, there are many of us who want to buy and sell stocks on their own. Knowing more about trading stocks all alone will make us independent investors. Thus, in future, we will not be dependent on any financial planner and take our decisions on our own.
Things to know while placing a stock trade online
You will have to open an online trading account which is specially developed for independent investors. Once you have completed opening the account, you should have the information like name, street address, e-mail address. telephone number, date of birth, Social security number, citizenship status, investment objectives, business address and occupation, other investment details, bank account and routing number used for investment purpose, etc. on your fingertips. In case, you open a joint account for trading purpose, you will also have to mention the same details of your joint account holder.
Once your account becomes operational, you will be able to buy and sellstocks, sell short or buy to cover as per your requirements.
How to buy and sell stocks
Here are few steps which will help you to buy and sell stocks online:
- You will have to select the ticker symbol for the particular stock which you want to buy or sell.
- You will have to specify the number of shares that you wish to sell off or purchase. While doing so, you should consider the commission or sales charge.
- You will also need to indicate the price at which you want to buy and sell the stocks. Here you should remember 4 things:
- Market price – It is the best price that is available for your stocks at that given point of time.
- Limit order – It is an order in regards to buying or selling a particular quantity of stocks at a specifically mentioned price which can be higher or lower.
- Stop order – This is an order issued when stocks are below or at a specified price. It should be noted here that the price at which the order is performed may not be the specified stop price.
- Sell stop – Under this option, the stock price is placed below the current trading price to stop unrealized profit.
- Stop limit – This is a combination of limit order or stop order.
- Once the price is fixed, you need to indicate the term of the order – “day order”, “good till cancelled (GTC)” order or “All or none” order.
- Once you are done with this, you should always preview your order. This gives you an option for last minute changes while you buy and sell stocks.
- Once you execute the process, you will receive a confirmation notice. Do not immediately cancel or resubmit as that can create duplicate orders.
- In case of margin trade, you should check out the marginable stocks before you take any decision.
So, now you know how to trade stocks independently. However, it should be noted that free riding is not allowed by the government. If you do so, you will be penalized and your account will remain frozen for 90 days.