If you’re a beginner wondering how to trade stocks but don’t know where to start, this is the perfect resource for you. Even though this resource is primarily for beginners, veterans and seasoned pros can still learn something new.

This article and video describe how to execute a trade using an online platform. If you’re seeking information on trading strategies like day trading, swing trading and long-term investing and you’ll find a whole world of information here at Investment U.

Your Beginner’s Guide to Trading Stocks

Trading Stocks with Online Brokerages and Investment Apps

The first thing you need to do when learning how to trade stocks is access to a licensed broker, an online brokerage or a trading app like Robinhood. In the video tutorial above, Oxford Club Research Manager Ben Dressing uses Investopedia’s Trading Simulator, which allows you to learn the ropes of trading without any risk.

While most online brokerages have unique platform designs, they all have the same essential features for placing a trade. So, the online broker you use may look a bit different from the one seen in the video but should work similarly.

Looking Up the Stock Ticker Symbol

When deciding what stock to trade, you’ll need to know its ticker symbol. For example, let’s say you decided to purchase some shares of Apple. You can look up the ticker symbol for Apple in your platform, or you can find it by searching for “Apple” on a site like Yahoo Finance

Quantity of Shares and Stock Pricing

The next thing a beginner needs to decide is how many shares of the stock you want to purchase. A good rule of thumb is to not put more than 4% of your portfolio in any one position. 

One of the most important things to pay attention to when purchasing a stock is its buy price. Here are some specific definitions relating to the buy price that you need to know:

  • Last Price The most recent price at which the stock sold. 
  • Bid What people are willing to pay for the stock.
  • Ask The price at which people are willing to sell stock.

You never want to pay more than the ask price. And the general rule of thumb is to go between the ask and sell price. 

Types of Stock Orders when Trading Stocks

The next decision you need to make is to determine what type of order you would like to put in. If you select to purchase the stock with a market order, it will likely be filled at a price close to the ask price.

If you put in a limit order, you can set the price you would like to purchase the stock for. The limit price sets the maximum you are willing to pay. If the stock is trading at $212, but you do not want to pay more than $211, you can set a limit order for $211. Then you execute the trade only if the stock drops to that price or below.

The Duration of the Order

The next thing for a stock trading beginner to do is set is the duration of the trade. If you select the good until canceled option, this tells the brokerage that the price you set is good until you manually cancel it. In other words, it keeps the order valid until it is filled, and the stock is actually bought. Or until you cancel the order.

You can also set cancel dates. So if you select day order, the order will be valid until the end of the trading day. At that point, if the system makes no purchase, the order will automatically be canceled. 

Finalize Your Stock Trade & Concluding Thoughts on How to Trade Stocks for Beginners

Now you can preview and review your order. Some brokerages will have a commission fee for the trade, and that will be reflected in the total cost. 

It will display your estimated total cost. If you need to edit or cancel your order, now is the time to do so. 

Now you may place the order.

Go to your account overview and look at your orders. This is where you can see your filled and open orders. You will see your order in the open orders list until it’s completed.

Those are the fundamentals you need to know for how to trade stocks as a beginner. Of course, that’s the easy part. Now you’ll need to do your research and decide on the best stocks to buy. And that’s where the real fun begins.