Saturday, October 13, 2007

How to buy stocks?

There are several ways to acquire stocks. The main way is to contact your broker, deposit appropriate sum of money and make an order for buying a certain stock. Broker could be more or less expensive depending on the service they provide. The full service brokers charge more, but they give advice about certain stocks, while discount broker charge less and usually don't provide advice about stocks. Another way to acquire the stock is the direct buying form the company. Usually if you own stocks of the company, the company could allow you to buy more stocks directly from the them. In that case a broker is not necessary, and therefore there are no brokerage fees.

There are two basic types of orders: market order and limit order. Market order means that broker should buy stocks for you at the best price for you at that moment on the market. With limit order you instruct broker to buy stocks only at a certain price. Usually it is a bed idea to buy stocks with market order, because that means that you are willing to pay any price on the market for the stocks. If there is a low volume of the stock you are going to buy, your market order could be executed later that day or even the next day. At that moment price could be much higher than at the moment you have placed market order. Limit order will prevent buying stock at a price higher then specified.

If you don't have a broker you will have to find one. Good place to start is on the web sites of NYSE and NASDAQ and look for members. It is necessary that you feel comfortable with your broker. If you have any doubt about a broker, find another one.

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