how’s it going today guys so today we’re going to be talking about how to buy a stock and this has been one of the most requested videos as far as the last few weeks on my channel so I know this may be a basic video for some of you who have been investing for a long time this is probably not the video for you but I wanted to make this video because I have a lot of new people on my channel who want to get involved with investing and they have no idea where to start that was the most common question I was getting I got people sending me messages on snapchat on my facebook page saying you know I would love to take action on your advice but I have no idea how to even start like what do I even need in order to buy a stock so this is going to be everything you need to know as far as how to set up a trading account and then we’re going to go over how to actually buy a stock what you need to know in order to find a stock on a trading platform and then we’re going to go over how to sell a stock as well and go over the different order types because when you buy and sell stocks there are different order types and you should be familiar with those so you make sure you are using the right one so that’s what we’re going to cover in this video but first of all in order to buy or sell a stock you need a broker which gives you access to a trading platform so in order to go out there and buy a stock you need to go through a stock broker you can’t just go out there directly and go buy a stock so you need to pick a stock broker and you have a couple different options out there so the first one is the one that people have been using for years this well I guess people have been using online discount brokers for years as well but many people still use in-person brokers you find yourself a stock broker and this is going to be a more expensive approach because obviously it’s person-to-person it’s going to be slower order execution because basically you’re going to call up your broker on the phone and you’re going to go hey why don’t you go ahead and buy 300 shares of this stock at the market price and then if you want to sell you’re going to have to call them up and go hey why don’t you go ahead and sell this many shares for me so it’s slower order execution because it’s person-to-person you can’t just jump on your computer or jump on your phone and execute your trading orders you have to call up your broker and then he has to go ahead and execute the orders so it adds an extra step to the process it but the other thing is though you may get better advice from a broker you may want somebody who you can talk to and get their feedback and get their advice as far as um what’s going on with the market so if you’re someone who wants someone to kind of talk to you may want to use an in-person broker because you want to talk to someone about your trades and ask them questions and have someone to be there for you that does come out of price so like I said it’s more expensive to have an in-person broker your next option is well most people are still using but many people are shying away from this as well this is the online discount brokers this would be like your Scottrade this would be your fidelity trying to think of a couple other ones out there there’s a ton of them these are basically the online discount brokers that are charging a set rate per trade some charge anywhere from five to seven dollars I know that for awhile I was using Scottrade and they charge seven dollars per trade with a $500 minimum account balance so this is basically a online discount broker they charge a smaller amount for Commission and they’re less expensive than an in-person broker you have faster order execution and many of them offer specific trading tools and specific trading platforms that they’re trying to entice you in with but the truth is usually what they’re offering you can find it for free somewhere else but they predict they pretty much put it all under the same route so they have it all in one location so if you’re someone who wants a really sophisticated trading platform you may want to look into an online discount broker or if you’re looking for very uncommon order types or order types at the beginner won’t use but a more advanced trader would want you may have to go through an online discount broker but for the rest of us for those of us who don’t want an in-person broker that we have to call on the phone and for those of us who have no interest in paying for our trades then we have the third option which is a free broker because now Robinhood offers commission free trading with no minimum account balance so they’re really a game changer guys I’ve had a lot of people ask me about stash and I just want to clear this up I did some research so as far as stash goes there another option as far as these trading apps but stash actually charges one dollar per month for under five thousand dollars so if you have five thousand dollars in there they’re going to charge you one dollar per month to have that money invested and if you have over five thousand dollars they’re going to charge you percent of everything you have invested per year so you are paying at significant amount of fees with stash with Robin Hood the only fees you’re paying are the mandated fees and I’m going to explain what those are right here and these fees are passed right along to the SEC and FINRA so Robin Hood is not getting a cut of this at all the way Robin Hood makes money we’re going to explain that in a second but they basically have a tiered membership where you can pay a set dollar amount per month in order to have access to margin that way you can buy on margin which we’ll explain that in a second so Robin Hood is not a non-profit they’re not doing it for free but they are offering pretty much free trading for anyone out there who wants the bare basics of trading but here are the two mandated fees that Robin Hood has to pay number one the sec charge is twenty three dollars and ten cents per 1 million dollars of principle in sell orders only so if you sold a million dollars worth of a security you’d pay 23 dollars and ten cents as a fee so obviously that is a very small fee and then we have the FINRA trading activity fee which is a little over one hundredth of a penny per share and this is on sell orders only with a cap of $so that FINRA trading activity fee will never exceed $so if you trade through the app Robin Hood these are the only two fees that you’re going to pay they’re mandated fees you have to pay these fees no matter what broker you go through but if you’re looking to have the cheapest trading the Commission free trading and no minimum account balance where you could go open an account for as little as a dollar then I would say Robin Hood is your way to go I do have a link in the description it’s an affiliate link if you guys want to sign up I actually haven’t gotten any kind of kickback for occasionally they run promotions where if I refer someone I may get a free share of a stock I’ve never been involved in one of those promotions but I just so strongly believe in Robin Hood and this is the trading platform I use I’m happy to recommend them you don’t have to use that link I just know occasionally you do get either a free credit or a free share of a stock so you may want to use that link just in case to running a promotion okay so once you decide on a broker and you open up your trading account there’s going to be two options that are given to you you have the option of opening a margin account or the option of opening a cash account 99% of us want to open a cash account but I want to explain to you what a margin account is just so you know so a margin account allows investors to purchase securities with borrowed funds essentially your broker gives you a loan that you pay interest on if you use that money and they usually match you dollar for dollar with what you put in your trading account so if you put $50,000 in your margin account your broker would likely extend you fifty thousand dollars of credit giving you $100,000 of buying power so you could invest a hundred thousand dollars in securities instead of just a fifty thousand that you had deposited in cash but if you do use the money extended to you you do pay interest on that so most of us are not looking to buy stocks on margin we just want to buy stocks with the cash that we deposit so we want to open a cash account this is a regular brokerage account where securities are paid in full so when you invest in a stock when you buy a stock you’re going to pay for that stock in full you’re not buying anything unmarked so once you’ve decided on what you’re going to do here and do understand if you want a margin account through Robinhood they have the Robin Hood gold I believe it’s called I don’t use it because I don’t trade on margin but that’s basically how Robin Hood makes their money they make their money by offering margin to their investors and some other bonus and add-on features for a paid membership so they’re not a charity by any means they make their money through their tiered memberships that they offer so once you’ve decided on what broker you want to go with you need to open up your account in order to do that you have to provide some documentation the basic stuff they need is proof of address so they know where you live as well as proof of identity and they’re going to need your social security number or your tax ID number because they have to report your earnings and your stock transactions to the IRS because you do have to pay taxes on those which I’m sure you guys know but they do report those because those are things you have to pay taxes on at the end of the year then you’re going to fund the trading account with Robin Hood it’s pretty simple you just select your bank account from the list however if you’re someone who does want to deposit cash to your account or you’re someone who wants to do Western Union or send a cheque you may want to go with an online discount broker because as far as I can tell the only way you can fund an account with Robin Hood is with a bank account so if you’re looking to do it in a different way you may have to use an online discount broker because that’s one of the ways that Robin Hood saves money is they don’t have offices so you can’t drive to a Robin Hood office and bring in money or give them a check and deposit it into your account you have to do it online and so that way it’s electronic and there’s no expenses on their part as far as funding your account once you’ve done that you need to decide on an investment so what you need to do is do your research about what you’re looking to invest in and then find the symbol of what it is you’re looking to invest in so let’s say for example you wanted to invest in a blue chip stock so let’s say you picked coca-cola well coca-cola stock trades under the symbol K oh so you would go into Robin Hood into the search bar after you’ve funded your account you would type in Ko or whatever trading account you use maybe you call up your broker and say hey I want to invest in coca-cola here’s the symbol you’ll give them the symbol you’ll type it in or whatever you do you’ll find it on your trading platform and then you’re going to click the buy button now before you do that we’re going to cover order types as far as buying and selling just so you know those basics so you would type in Ko in order to get coca-cola stock but let’s say you wanted to invest in an exchange-traded fund this is basically a fund of different stocks or different securities that trades on the stock market so basically it would be like investing in a fund like a mutual fund but you’re actually investing in it through the stock market so if you wanted to invest in the Vanguard total stock market ETF you would just type in vti into that search bar and that would come up on your screen as well well let’s say you wanted to invest in some investment grade bonds if you’re looking for a good bond fund maybe you wanted to look for the Vanguard total bond market ETF you would just type in B and D so not only can you invest in stocks through a trading platform you can invest in exchange-traded funds you can invest in wreaths which is a real estate investment trust there are many different things you can invest in outside of stocks so that’s why it’s important to do your research and figure out what it is you want to invest in okay so the last thing we’re going to cover here is buy and sell orders now I know this may look confusing but trust me once we go through the examples you guys are going to understand this and you’re not going to be afraid to use these orders because these allow you to do a lot of different things they also allow you to automate some of your trading so let’s say you go on vacation and you have a certain price in mind that you’re looking to buy a stock for or a certain price you’re looking to sell at and you don’t on monitor stock charts you can set some of these orders to do that for you now all of these orders are available through Robinhood these are the basic orders that people should use and understand there are a ton of different ones out there and obviously if you use a more sophisticated trading platform there are additional order types but these are the four that you should be familiar with number one first buy orders is a market order this is very simple this is the one most people use let’s say you wanted to buy Coca Cola stock we’re on market hours so we’re it’s during trading hours while the market is open this would execute a buy order at the current market price so if coca-cola stock was I don’t know what the stock is if it was 72 dollars and 10 cents a share you execute a Buy and they’re going to buy you that stock the number of shares you want at the best possible price and it will be somewhere around that $72 and 10 cent price mark because you’re buying at the market price then we have a limit order this is the maximum price you will pay for a stock so let’s use XYZ stock which is a fictitious stock for example I don’t know if it actually exists I’m actually now that I said that maybe there is a symbol XYZ out there but let’s say you’re buying XYZ stock it’s currently at $30 a share you have your eye on the stock and you want to buy in at $25 you could set a limit order to buy the stock no higher than $25 so you would do a limit order with the price of 25 and if that stock fell to $25 or below it would execute that order and you would buy shares of XYZ stock for no higher than $25 then we have a stop loss order this is basically in order that executes a buy order when the set price is reached so let’s use ABC stock for example this would be where ABC stock is $20 you’re waiting for it to break a certain price level so you want to buy ABC stock no lower than $25 so if it went above $25 then you would automatically execute that order and you would buy ABC stock there’s a big problem with this guys with stop-loss orders for buy and sell there’s no gap protection what I mean by this is let’s say ABC stock was acquired by a bigger company and all of a sudden the stock went from $20 a share to $40 a share your order would still be good and your order to be executed at $40 a share maybe you wanted to pay $25 a share and you didn’t realize that you set a stop loss order and next thing you know you just bought shares at $40 a share so if you want to make sure that you don’t pay a certain price that exceeds the set value then you need a stop limit order and that’s what this is right here this triggers a limit order when the set price is reached so for this we’re using de F stock which I’m sure these are actually real stocks at least some of these probably but let’s say de F stock is $50 a share you want to buy no higher than 50 110 after the stock reaches 51 dollars so if the stock comes above 51 dollars a share you will pay anywhere from 51 to 50 110 for shares of that stock but if that stock exceeds 50 110 you don’t buy so this gives you gap protection where if the stock gaps open and what I mean by that is off trading hours if there are a large number of orders in the queue then the stock will open at a much higher price and if you have a stoploss order it may execute your buy order at a much higher price than anticipated but if you use a stop limit order you have a gap protection where if it gaps well above what you’re willing to pay for that stock the order is no good and the order is not executed so many people confuse these two and many people make the unfortunate mistake of setting a stop-loss buy or sell order and they end up buying or selling much higher or much lower than anticipated because the stock either gaps up or gaps down upon opening so that’s something to consider if you’re looking to set a stop loss you might want to actually set a stop limit order instead so now we’ll go over the sell orders they’re called the same thing but we’re just going to do an example so you guys get the picture here so once you’ve bought a stock and let’s say you want to sell that stock here are the different orders available to you as far as selling a stock there’s a market order which like we said will just execute a sell order at the current market price so they’re going to go out there and find you the best possible price they can at the current market value limit orders is the minimum price you will sell at so let’s say XYZ stock is $25 a share and you will sell at any value above $30 you would set a limit order for 30 and if XYZ stock exceeds $30 a share it will execute that cell order and you will sell your position then we have a stoploss order so this executes a sell order when the set price is reached so let’s say ABC stock is $40 a share but you will sell below $35 now again there’s no gap protection here so if all of a sudden ABC stock went from $40 to $20 a share your stop-loss order would be executed and you would sell at 20 a share so if you don’t want to have that open-ended selling you might want to have a stop limit order which would trigger a limit order when the set price is reached so let’s say de F stock is $15 a share and you’ll sell no lower than 1190 after the stock reaches $12 a share so if the stock falls in value to $12 a share and then it falls somewhere between 12 and 11 90 or share your order is good and your order will close out and you will sell that position but if de F stock all of a sudden falls when it opens to $10 a share your order is no good because it never fell between 12 and 1110 so that’s not limit order is no good and you didn’t sell without anticipating it to be a sell so those are two orders that are very helpful for people looking to automate their trading and many people unfortunately make that mistake of doing stop-loss orders and they get in trouble when there’s a gap when the price movement the only other order that is useful and it’s not available to Robinhood is a trailing stop order this is basically an order where if a stock has a certain percentage or a certain dollar amount price movement it executes a buy or sell order so you could set a trailing stop of 10% which means if that stock falls more than 10% within a trading day you automatically sell or if that stock rises 10% within this trading day you automatically buy or you can set it for a dollar amount so if that stock falls 10 cents in one day you’ll buy it or if that stock goes up 10 cents in value you’ll sell it something like that that’s the only other order that I have found to be useful but these are good enough for most people looking to get invested to get involved in the stock market that’s pretty much it those are the basics so once you decide the stock you want to buy and you have your symbol and you figure out your buy order you just go ahead and buy that stock so if you’re looking to just buy that stock at market price you’ll just do a market order if you have a set price in mind you’ll do a limit order and then at that point if you’re holding that stock for a long time you really don’t have to have a sell order in place but if there’s a certain dollar amount you’re looking to get for that stock and you want to sell in the short term you might set up some kind of sell order but this is basically everything you need to know to actually go out there and buy a stock and then sell a stock so I kind of covered a little bonus information there for you but I just thought it was important to explain both sides of these order types anyways guys that’s pretty much all I got for this video if you are new to my channel please consider subscribing I make videos like this every single day educating you guys about the stock market and investing in all kinds of financial topics there’s a lot of good information on this channel if you enjoyed this video please drop a like and as always I thank you for taking the time to watch this video and I hope you have a great rest of your day you
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