How to Buy and Sell Shares: Have you ever been fascinated by making money by just using your mind and calculations? Or did someone ever flatter you that you can make money by investing and trading in stocks? If the answer is yes and till now you don’t know the ABC of stocks, how to purchase, how to sell stocks, then we will be guiding you of making some handsome money through this guide of ours.
Know in Detail – Buy and Sell Shares
How To Buy Shares
This question is quite embroiling for the beginners. But purchasing a share is not as complicated as we think.
It involves specific steps to follow to buy a share of a company. Check them right below.
Find a Stockbroker
A broker is a mediator between a trader and the exchange market. Finding the right broker depends on what type of trading facilities you want and what are the platforms and trading assistance a broker is providing.
As all the trades are placed via brokers so, one should make sure that the broker is providing an online platform for trading. That allows access all accesses to his/her deposits, withdrawals and see the brokerage fee and service charges from the broker online.
The most important thing while searching a broker is, he/she should be registered with the financial regulatory authority of that country and provide adequate learning resources to its user.
Now, brokers are of two types– one is a full-service broker, and the other one is a discount broker. A full-service broker like ETFinance, OInvest, T1Markets is like the one who, along with their personal guidance, gives full-fledged services to their customers. They mostly work as the planner for the investment of our assets.
In other words, we can say that they manage some per cent of one`s assets.
Likewise, there are discount brokers, aka active brokers. They work best for individual traders. These brokers provide accounts that behave like Robo-advisors, and an individual can place a trade with limiting loss and profit orders in them.
An individual broker has the mindset of investing a small amount of his money for less time compared to investment.
Open a Demat Account
Stocks are nowadays traded in a dematerialised manner. Hence, a standard current or saving account won’t be useful in that. One has to open a separate dematerialised account for trading with the help of a broker.
Demat account is responsible for holding all the shares and the transaction history. It also reflects all of your portfolios that you trade with the help of a broker.
Do the Research and Buy The Stocks
Now, after choosing the right broker for yourself, you should go with investment. i.e. according to your capital and risk-taking capabilities, you can choose from among individual stocks, commission-free ETFs, options, CFD and commodities etc.
Among all of them, it is recommended to buy the stocks whose prices are going to rise in the rising markets. And this analysis can be done by checking the quarterly report and the annual profit reports of the company. And intriguing the management letters sent to their investors about their share profit.
The quantity of shares bought depends on individual expertise in the field of share trading. If you are a novice, then it recommended starting with only one share. And gradually increase your position as you gain knowledge about markets, charts, and indicators.
To churn a profit from invested stocks; one should always place limit orders like stop-loss orders. These orders help one protect from significant losses.
For example, if we put stop-loss order in our trades, then we can retract out the trade when the price goes below the support levels.
Which Stocks One Should Buy
Buying a stock needs prior fundamental and technical analysis, and if you want to skip both of them, then go by the trend of the most successful and steady stock.
It is recommended that one should buy stocks which are among the low-cost index funds. Also, investing in the index is comparatively less risky compared to individual stocks.
If you really want to buy an individual stock, then it is prescribed that you invest only 10% of your total capital in that stock and buy it only if you feel that the prices of the share will rise in future.
How To Sell Stocks
Stock selling includes certain tricks for making a profit statement. Sale of shares employs specific strategies like whether you want to trade with a perspective of a trader or an investor.
A trader makes the purchase and holds it for some time and then sells it to earn a small profit. At the same time, an investor does the same keeping in mind of having much higher yield as a return till he gets retired.
Now we are providing you with the steps to sell your stocks. And the process is as easy as a child`s talk.
- Step-1: Examine the price that you want for your shares.
- Step-2: Apply the sell orders or GTC orders
- Step-3: You can also use put options to minimise your risks.
- Step-4: After you have made the profit close your position for the trade.
- Step-5: Encase your money in the account.
So, here it was a simple process of purchasing and selling a stock. We hope you gained a lot from this article. It should be noted that one should do his personal research before buying the stock of any company.