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 * Personal Finance
 * Start Investing

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How to Start Investing


HOW TO TRADE STOCKS

BUY, SELL OR HOLD? TRADING STOCKS IS HOW YOU MAKE MONEY IN THE MARKET, AND WE’LL
SHOW YOU HOW IT’S DONE.

THE PROCESS OF TRADING STOCKS IS FAIRLY STRAIGHTFORWARD. IT STARTS WITH A
STOCK’S TICKER, WHICH IS A 1-5 LETTER CODE THAT UNIQUELY IDENTIFIES EACH STOCK.
FOR EXAMPLE, APPLE’S TICKER SYMBOL IS AAPL.


TIP

An easy way to find a stock’s ticker is to Google a company’s name followed by
“ticker.”

When you’re ready to buy a stock you’ll get a quote of the stock’s current price
from your broker. With online brokers, you’ll pull up the broker’s trading page
and enter the ticker symbol, how many shares you want to buy and using what
method. Find the best brokerage account for beginners.

Buying methods include at the prevailing market prices (called a market order)
or when the stock reaches a specific price (called a limit order).


TIP

In the U.S., the stock market opens at 6:30 a.m. PT / 9:30 a.m. ET and closes at
1 p.m. PT / 4p.m. ET.


STEP ONE: BUY

For example, say you have $500 in your brokerage account and your analysis
indicates Apple’s stock is poised to rise and you decide to buy three shares.

At your online broker’s website or app, you sign in and press “Trade.” On the
trade page that appears, you enter the ticker symbol AAPL and 3 shares for the
number of shares you want to buy. On that same page, you’ll see that AAPL’s
quote is at perhaps $150 per share. So your investment would amount to about
$450.

You'll also choose the market order option and pay whatever the stock's current
price is.

Most brokers give you a chance to review your trade order to make sure you got
it right before hitting the trade button. Once you hit the button to activate
the trade, your order goes to market makers who match your buy order with the
nearest price at which investors are willing to sell Apple stock.

Confirmation that your buy order is filled, or completed, comes in a matter of
seconds.

Now you own 3 shares of Apple that you bought at about $150 a share. You’ve now
got about $450 invested in Apple stock and $50 left in your account to buy other
stocks.


STEP TWO: HOLD

Once you own a stock, you can regularly monitor its progress in the stock
market. It only takes seconds to check how the market is doing and determine if
your stocks are rising or falling.

If Apple’s stock price rises the next day to $155, the value of the three shares
you own increases by $15 to $465. That’s a 3.3% increase from the day before,
and that’s the amount of profit you have on paper.

Keep in mind, you don’t actually realize any profits on your trade until you
sell the stock and lock in your gains or losses.

Learn more tips about holding stocks with free lessons from IBD University.


TIP

It’s helpful to think of your profits/losses on a trade in terms of percentage
up or down, not dollar value. This is because stocks trade at different
prices-–so being $10 up on a $50 stock (+20%) is much different than being $10
up on a $250 stock (+4%).


STEP THREE: SELL

If you had decided to sell your three Apple shares when they were trading at
$155 each, you’d realize a gain from the trade and end up with $465 from the
sale plus the $50 you had sitting in cash, for a total of $515.

Keep your losses small, and don’t let them snowball because you’re holding out
hope for a big turnaround—stocks headed lower tend to continue in that
direction.

For more on selling stocks, check out free lessons on IBD University.


TIP

Always know how much you’re willing to lose on a trade before you make it and
cut your losses when it hits that point. IBD’s investing system recommends
cutting your losses when a stock falls 7% below the price you paid for it—no
questions asked.


KEY POINTS

1

Trading stocks is simple and transparent. The first step is choosing a broker
that will facilitate the trade when you enter your order.

2

When you buy a stock, you own a share of that company. The stock price will move
every day the market is open, so be sure to check the prices of your stocks
regularly.

3

Your gains and losses in a stock are not realized until you sell it, and then
your account will be credited with either the larger amount (gain) or smaller
amount (loss).

Read more on How to start Investing

 * Why Start Investing
 * Types of Investments
 * What is the Stock Market?
 * How to Trade Stocks
 * What Makes a Great Stock
 * How to Read a Stock Chart
 * Stock Market Myth vs Facts
 * How to Get Started

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MORE ON INTRO TO INVESTING

WHY START INVESTING NOW

If you’ve got money, you can make it work for you. Here’s the best part: you
don’t need a lot to start, and getting an early start can make a massive
difference.

TYPES OF INVESTMENTS

Where can you stash your money, aside from a shoebox under the mattress? These
are the most common ways to invest and grow your funds.

WHAT IS THE STOCK MARKET?

Bulls, bears and big banks: It’s all part of the rich stew that is the stock
market. Here’s an intro to how it works and the lingo to know.

HOW TO TRADE STOCKS

Buy, sell or hold? Trading stocks is how you make money in the market, and we’ll
show you how it’s done.

WHAT MAKES A GREAT STOCK?

There’s an old saying: All stocks are bad unless they go up. We hit the books
and found 5 things that the biggest stock market winners have in common.

HOW TO READ A STOCK CHART

Got 10 minutes? Then you can learn to read stock charts and give yourself a
massive edge when you’re investing.

STOCK MARKET: MYTHS VS. FACTS

The stock market has more myths than ancient Greece. We’ll use research and
facts to debunk the 6 most common ones.

HOW TO GET STARTED

Now that you’ve learned about the stock market and trading, interested in trying
it out? Here’s your guide to jumping in.

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