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How to Buy Stocks

When an investor is ready to learn how to buy stocks, there are many factors to take into consideration. There are numerous terms, ideas, and investment strategies that are available for the investor to learn. Itís hard to know where to start!  This article gives a brief overview for those investors who need to learn how to buy stocks.

The first thing that you need to do is to educate yourself about stocks before you purchase them. You can take tutorials online that teach you how to buy stocks and you can research different types of trading styles and techniques.  You should decide if you want to learn fundamental analysis or technical analysis as a method for purchasing stocks, and if you are interested in long term investing or if you are interested in day trading as an investing technique.

The second thing you must figure out when you learn how to buy stocks is what type of broker you would like to use. Brokers range from the discount broker who is the least expensive to the full-service broker who offers the most services at a higher rate. The main difference between the two is that the full-service broker provides all of the necessary services plus they offer advice and they do more research for you. The online discount broker provides the basic services to trade stock online, but they donít offer guidance and basically just take your orders.  After you decided what type of broker you want to use, then you need to decide which brokerage firm you would like to utilize. You will need to contact the firm to request an application, many of which are offered online, and then you must send a check or wire money to open an account.  After you learn how to buy stocks and then open an account, you can begin trading stock!

Part of this process includes deciding if you want to do your trading and investing online.  If you decide to buy stock online, then you will need to know the stockís symbol. If you donít know the stocks symbol, then the online broker should have a symbol look-up feature.  Once you know the symbol then you need to specify how many shares you want. When you look up the stock, there will be two prices showing. These include the bid and the ask price. The bid price is the price buyers are willing to buy at for that moment, and the ask price is the price that sellers are willing to sell for at that moment.  This is only a small portion of what you will need to learn about how to buy stocks!

After you know how to buy stocks, you must be sure that you build a strong portfolio. Investing in the stock market is just part of building a portfolio. You must learn how to diversify your portfolio, through portfolio management. The rule of thumb is that a properly diversified portfolio has 5% of its market value in a variety of areas. These areas include gold or other commodities, small cap stocks, global index funds, and miscellaneous speculative opportunities.

Investing in the stock market is a great way to make money. Just be sure that you not only know how to buy stocks, but that you also learn about asset allocation, portfolio management, and all of the other investment basics that will ensure you success in your investment career.

 

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