Buy Stocks, Buy Stock

By: EconomyWatch   Date: 23 November 2010

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EconomyWatch

The core Content Team our economy, industry, investing and personal finance reference articles.

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One of the most exciting ways of participating in the financial market is by trading stocks. When you buy a company’s stocks, you become a part-owner of the company. Your returns are dependent on how the company performs, general economic conditions and investor sentiment. While the equity market can be very lucrative, it is important to buy stocks cautiously, since market volatility can result in huge losses. It is crucial to have a well defined, systematic approach.

How to Buy Stocks

Here are the steps you can follow to buy stocks:

Step 1: Choose a broker who can give investment advice that suits your financial goals and needs. You can select from full-service brokers, discount brokers and online brokers. Full-service brokers offer buying and selling tips on the basis of their in-depth research. If you are looking for a cheaper option and want to research the market yourself, you can opt for discount brokers. You can also opt for online trading facilities. Online brokers are the best option for individuals who have some expertise in stock trading.

Read more about how to choose a stock broker.

Step 2: Open a trading account. This will involve paying the minimum deposit required to be maintained in the account.

Step 3: Educate yourself about the stock market and its dynamics. Study various stocks and decide on the ones that best suit your requirements, goals and risk appetite. It is also critical to research sectors that can offer high or stable returns. You will have to make choices between growth and defensive stocks and large-cap and small-cap stocks. There are several websites that offer stock related information as well as television shows centered on the stock market.

Step 4: Select the stocks and decide on the quantity of shares, which is typically traded in multiples of 100. You can instruct your broker to buy particular stocks when their prices reach a certain level.

Step 5: Check the transaction details sent by your broker.

Step 6: Review your stock portfolio regularly to evaluate its performance. Make appropriate changes if you are not moving towards your financial goals.

Tips to Buy Stocks

Here are a few useful tips to buy stocks:

  • Buy a stock when its market price is low. Hold the stock and wait till the prices have risen to a level at which you can get sufficient returns.

  • Do not consider the expert advice on stocks as the ‘holy grail’ of investing. Buy stocks only when you are completely confident about their profitability.

  • Buy stocks from different sectors of the economy.


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