how to buy and sell stocks

investing for beginners

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how to buy and sell stocks

investing for beginners

Ok so you’re set up on your brokerage and trying to figure out how to actually buy and sell stocks! Take this lesson for the inside scoop.

what's in this lesson?

Ok so you’re set up on your brokerage and trying to figure out how to actually buy and sell stocks! Take this lesson for the inside scoop.

overview

Ok so you’re on your investing platform and you’re wondering how you can make trades. Here are a few tips about the mechanics of things to keep in mind.

 

Bids and Asks

For every stock, you’ll see what’s called a bid and an ask. This is the spread that determines the price of the stock. Sellers have placed a “sell order” on a stock at a particular price–the ask–and buyers have placed “buy orders” on stocks at a particular price– “the bid.” As soon as a bid comes through that’s higher than an ask, a sale will automatically go through and you’ll be awarded your stock.

 

Orders

There are, in general, two types of buy or sell orders you’ll commonly make.

 

One is called a “market order”–the more common trading setting–which essentially tells the broker that you want to buy a stock at the lowest ask price available, or sell the stock at the highest bid price available. Market order transactions will be executed instantaneously because the system is just looking for the best available price for you based on the market options.

 

The other option is a “limit order.” In a limit order, you can essentially say that you want to buy or sell a stock, but only if it’s above or below a certain price. So maybe you’re looking at a stock and you say to yourself “I don’t want to spend above $40 per share on that stock.” You can put in a limit order that tells the system to only buy if the lowest ask price drops below $40, and the buy will execute if/when that happens. The same can be done in reverse with a limit sell order. One thing to note here: your transaction might take a while to go through, or might never go through at all, if the price of the stock takes time to cross, or doesn’t cross, your limit.

 

Source(s): Fidelity

overview

Ok so you’re on your investing platform and you’re wondering how you can make trades. Here are a few tips about the mechanics of things to keep in mind.

 

Bids and Asks

For every stock, you’ll see what’s called a bid and an ask. This is the spread that determines the price of the stock. Sellers have placed a “sell order” on a stock at a particular price–the ask–and buyers have placed “buy orders” on stocks at a particular price– “the bid.” As soon as a bid comes through that’s higher than an ask, a sale will automatically go through and you’ll be awarded your stock.

 

Orders

There are, in general, two types of buy or sell orders you’ll commonly make.

 

One is called a “market order”–the more common trading setting–which essentially tells the broker that you want to buy a stock at the lowest ask price available, or sell the stock at the highest bid price available. Market order transactions will be executed instantaneously because the system is just looking for the best available price for you based on the market options.

 

The other option is a “limit order.” In a limit order, you can essentially say that you want to buy or sell a stock, but only if it’s above or below a certain price. So maybe you’re looking at a stock and you say to yourself “I don’t want to spend above $40 per share on that stock.” You can put in a limit order that tells the system to only buy if the lowest ask price drops below $40, and the buy will execute if/when that happens. The same can be done in reverse with a limit sell order. One thing to note here: your transaction might take a while to go through, or might never go through at all, if the price of the stock takes time to cross, or doesn’t cross, your limit.

 

Source(s): Fidelity

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