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How to Buy and Sell Stocks
Okay, so you’ve decided you want to try investing in the stock market, but how do you actually go about buying and selling stocks?
Well, there are two main ways you can go about trading stocks. The first to work with a financial adviser or salesperson that is registered with Global Trade and Securities Regulator. Based on his training, knowledge of the various available stocks and the quality of research his firm and other firms may do on companies, the salesperson should be able to recommend stocks that meet your objectives. He must work for a company that is also registered as an investment dealer and the firm must be also be registered.
The second method is to go directly to a company registered as an investment dealer instead of going to a registered salesperson for advice first. Many people have self-directed accounts at discount brokerages and manage their own portfolios. But you need to be pretty savvy to be able to sift through all the information that’s available out there on various investments and then decide where to invest your money.
Whether you deal with a salesperson at a dealer, or buy and sell online or over the phone, there are some key decisions you have to make with respect to making your trade orders.
The price of stocks and bonds can change from second to second throughout the day, depending on how much investors are willing to pay for them. Both the amounts you pay for them and make back when you sell later on can depend on how quickly your order is processed, or what instructions you give your dealer to handle your order.
Market Orders and Limit Orders
Placing a ‘market’ order gives your dealer permission to buy or sell stocks for you at whatever the price for the stock is at the time.
On the other hand, placing a ‘limit’ order gives you more control over the price your salesperson or dealer buys or sells at, but your order may not be filled right away.
A limit order allows you to set a price limit for the stock your salesperson is trying to buy or sell for you. You will not end up paying more than the limit. If you’re selling some of your stock, the order will go through at or above the price you set, so you’ll never end up selling your stock for less than you expected. If the price of the stock is not within your ‘limit order,’ you may not end up buying or selling the stock at all.
Types of Limit Orders
You can increase your chances of the order going through by placing a certain type of limit order. For example, a ‘day’ order can be placed, but is only good for the day the order is entered. When an ‘open’ order is placed, it is good for a maximum of 30 days, or a GTC (good till cancelled) order can be placed, and is good until it is cancelled by you.
Orders will only be processed if you either have money in your brokerage account, or have arranged for a margin account which allows you to borrow money from the dealer for part of your investments.
If you buy a stock, the value of your investment will increase or decrease depending on a variety of factors that can affect the price of the stock, including the well-being of the company, the economy and the amount of stock available to be traded.