Investing,
July 25, 2020

How to Buy Shares and Stocks : A to Z Guide

Gregory Weiss
How to Buy Shares and Stocks : A to Z Guide

Are you thinking about investing in the stock market? You want to buy shares but you don't know where to start? In this article we are going to try to offer you the fundamental information you should know and the method to buy shares in the simplest way possible.

Not many years ago investment in the stock market was reserved for many fewer participants and practically only involved large financial institutions and wholesale clients with significant capital. Fortunately this situation has changed radically and with the advancement of new technologies investment has become more democratic, giving way to many more participants, including retail investors.

Today you have at your fingertips various ways to buy shares but the cheapest, simplest and most convenient is to do it yourself through the Internet. You will only need an internet connection and a computer, a tablet or a mobile phone. You can learn and start buying shares online quickly from home or anywhere. Let's see the fundamental tools you're going to need.

Are you thinking about investing in the stock market? You want to buy shares but you don't know where to start? In this article we are going to try to offer you the fundamental information you should know and the method to buy shares in the simplest way possible.

Not many years ago investment in the stock market was reserved for many fewer participants and practically only involved large financial institutions and wholesale clients with significant capital. Fortunately this situation has changed radically and with the advancement of new technologies investment has become more democratic, giving way to many more participants, including retail investors.

Today you have at your fingertips various ways to buy shares but the cheapest, simplest and most convenient is to do it yourself through the Internet. You will only need an internet connection and a computer, a tablet or a mobile phone. You can learn and start buying shares online quickly from home or anywhere. Let's see the fundamental tools you're going to need.

What do I need to buy stock?

The first thing you need to buy stock on the Internet is to open an account with an online broker. A broker is a company authorized and regulated to intermediate in the purchase and sale of stock market shares and other financial instruments (such as currencies, commodities, stock market indexes, ...) and will be responsible for executing the purchase or sale of the shares you request.

To buy shares online and be able to make significant profits with a small investment the best option is to do it through CFDs or contracts for difference (What are CFDs?) because it is a method that gives us the following advantages:

Maximum agility and flexibility: When you buy shares through an online CFD broker you will not really be physically buying the ownership of the shares, but you will also be able to obtain profits with the increases or decreases in the price of these shares, which is what is really interesting. The buying and selling operations that you request will be executed immediately, in a much faster way, through your broker's trading platform with a simple click. This makes it much more flexible to buy shares or sell them whenever you want.

Invest with leverage: When you invest with CFDs you also have a fundamental instrument to obtain important profits with small sums of money: leverage. You can invest a small amount of money that you provide as collateral for the operation while you are actually trading in the market with an amount several times higher. Your broker is the one who offers you an amount of borrowed funds so that you can open much larger positions than you could do with your capital alone. For example, if the available leverage is 1:5, with which you contribute 100 $ of guarantee you will really be able to buy shares for an amount of 500 $. With leverage the ability to generate profits is maximized but also implies a higher level of risk but well used is a fundamental instrument to achieve significant profits without having a high capital to invest.

You can make profits from both upward and downward movements: Another great advantage of investing in stocks through CFDs is that you can make profits whether the price of the shares goes up or down (something you can't do when buying stocks with the traditional method in which you would only benefit if you buy the shares, they go up in value and sell them at a higher price than you bought them). In the case of CFDs, if you believe that the price of the shares is going to rise, then you can open a buy position to close it later, when you think convenient, with a sale and collect profits. If, on the other hand, you believe that the price of the shares is going to fall, you can open a sale position and when you think it is convenient, you can close it with a purchase. In this way you can take advantage of both upward and downward movements and trends.

Learn how to buy stocks with a demo account: Most online CFD brokers will allow you to open a free demo account. This is a trading account that comes preloaded with a fictitious balance so you can simulate trades in a way that is practically identical to a real money account but that will allow you to learn and familiarize yourself with the trading platform without putting your money at risk from the first moment (See brokers with demo accounts).

You can start buying shares from $100 or less: When trading online with CFDs you don't need to have a high initial capital. In most online brokers you can open an account from $100 or even less. Most brokers also offer welcome bonuses depending on the amount of money you deposit initially.

How to learn how to buy stocks online and invest in the stock market?

The right way to start buying stock and learning to invest is through practice. In the first few trades you should be cautious and start investing with small amounts of money.

Many beginners use to learn a demo account but start buying stocks without too much criteria and without pressure or fear of losing, as there is no real money at stake. From experience I can assure you that this is not the best way to learn how to invest correctly.

The right thing to do is to start managing a demo account but take it seriously, as if it were a real account. Try to learn the basics, be disciplined, analyze the trades carefully and develop your own investment strategy. You can take a look at this article that can help you: How to use a demo account to learn how to trade.

If you haven't been in contact with any trading platform so far, here you have a couple of tutorials that we have elaborated about some online brokers with whom you can buy shares online. They are tutorials designed for beginners with screenshots in which you can see step by step how the trading platform works and the options available:

What shares to buy?

The million dollar question. Everyone wonders what are the best stocks to invest but it is very difficult to give a closed answer to this question. Stock price behavior varies from time to time and stocks that have been a good call option in the past don't have to stay that way in the future. Even depending on each trader's profile and strategy, stocks that may be good for one may not be good for another.

For your first tests you can start by analysing shares of (Twitter, Facebook, Google, Apple, Coca Cola, Tesla Motors, Visa,...), Germany, France, United Kingdom, Italy,... These most popular stocks generally have less volatile behaviour and you can easily obtain more information about events that may affect their price.

Try to learn and get good results on the demo account. Don't try to rush into a real account. When you feel comfortable you can move to a live account and start with a small amount of money that you are willing to lose without being negatively affected.

Both at the beginning and when you have more experience, when buying stocks you should isolate yourself from your emotions. Don't get carried away by fear or greed. On the Internet you can read a lot of information about investment strategies, what stocks to buy,... but the most important thing is PRACTICE and develop your own strategy to buy stocks. Courage and good luck.

If you find this article interesting we would be very grateful if you share it in social networks and you can also send us your experiences, progress or opinions from the comments section below.

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