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How To Buy Stocks?

Shares are bought by placing an order with a broker. The broker who has the licensed contact to a trading center can or should then execute the order. Such trading centers are commonly called stock exchanges. The most fundamental order types are called buy and sell. In addition, there are numerous sub-types, some of which may differ only in the specification of the conditions for the main order.

Where to buy shares?

Shares are bought at the trading centers mentioned above. Examples of trading centers are Frankfurt am Main or New York. A buy order for a particular share can then be placed via the broker. The broker executes the order promptly, unless certain forward instructions in the order prevent this. Fees are naturally incurred by the broker, as well as by the trading center where the order is executed. By the way, nothing works without a securities account. A securities account is a depository for shares in the same way that an account is a depository for money.

When do I buy shares?

You buy shares when you want them. This may sound ironic at first, but this is precisely the psychological problem for many beginners: they buy shares, for example, because they want to make a lot of money quickly. The corporate form of a stock corporation primarily fulfills the purpose of realizing free float. Note that as an owner of shares you are a co-partner of the respective company. These and other basics should be present to you first before you start trying to make money from share price gains. For this type of stock business, the following naturally applies: buy at low prices, sell at higher prices. In the long term, shares serve to generate dividends. These are usually paid out annually and are usually more attractive compared to other forms of investment. Note that even if you intend to earn dividends, it is better to buy at low prices. It is advisable to trade the shares as far as possible so that a so-called capital gain is generated.

Which shares to buy?

You have free choice in the selection of shares. You can be guided by the profit intention as well as by moral aspects. For example, if you want to do something for the environment, invest in energy shares. Bear in mind, however, that energy stocks in particular have been subject to considerable fluctuations in recent years, partly due to the subsidy culture, which is not transparent to shareholders.

At the beginning of the year, the stock markets are going crazy again. Not least because of the slide in crude oil prices and the price losses in China, the short-term outlook among many analysts is rather negative. Nevertheless, due to the persistently low interest rates, there is no alternative to the stock market in the medium and long term. This is reason enough to familiarize oneself with the possibility of buying shares online and to gather information about it. The following describes things to look out for when buying shares online:

The right way to start buying shares

When it comes to stocks, it is of utmost importance to wait for the right moment to enter and then strike. If a stock has been able to record high price gains in recent weeks and months, a countermovement can usually be expected soon. Buying a stock at its all-time high is therefore generally not a good decision.

So how to buy stocks?

  • The stock market always has a lot to do with emotions.
  • For most investors, the focus is therefore on finding particularly innovative companies.
  • A company that generates solid profits but is not considered innovative by market participants has a much harder time on
  • the stock markets than a start-up with novel products.

A company without debt

The greatest danger when trading in shares is the possibility of a total default. To prevent this, it is essential to pay attention to whether a company is financially sound and not sitting on a large mountain of debt, for example, resulting from previous business in another area.

Size is not everything when buying shares

If you want to invest in a company, you should not only pay attention to its size. Many other factors are important. For example, the current figures of the company, which must be published on the Internet by the companies themselves. Thus, the potential investor can inform himself about the current situation of the company.

The environment must be right

A company never stands alone, but is always part of the country in which it has its headquarters. Political turmoil in one country therefore also has an impact on the share price of companies in the same country and should not be underestimated. An online investment in a company from a politically unstable country, is therefore always associated with significantly higher risks and should be reconsidered. Even when the company is exceptionally well positioned.

Low trade fees

Every online trade incurs a fee to the respective bank, which often increases with higher total volume. An online comparison of the conditions of different banks is therefore highly recommended and helps not to have to stand with disproportionately high fees, since these must be compensated by a rising share price.

Fast execution

The stock market is an up and down and price fluctuations are therefore to be feared at every second. The time between entering and executing a trade must therefore be as short as possible. Since this is by no means the case with every provider on the net, an online comparison between the individual online banks is also recommended here. Only then can the customer be sure that his order will be executed at the price he wants.

Good customer service for the share deposit

The stock market is not always free of complications, so customer service is very important. It is always possible that an order is accepted incorrectly or that the invitation to the company’s general meeting is not received. In these cases, a good customer service of the executing bank is indispensable.

24/7 support

If possible, this should be available around the clock and be quickly available to the customer. An online comparison is certainly not a mistake.

Long-term thinking

  • No matter which way a share is acquired, there is one thing that every buyer should keep in mind in any case: Anyone looking for a quick profit is in the wrong place on the stock markets.
  • Instead, the purchase should always be seen as a long-term investment and should therefore not be based on too risky transactions. It is thereby like in the genuine life.
  • Again, probably no shady businessman would be given a lot of money in the hope of making a quick profit.

Go for a strong dividend

Most companies give their shareholders a share of the profits generated. However, the returns on this vary widely. If several shares are available for purchase, the one with the highest dividend should be taken in case of doubt, as this is a good hedge against low interest rates and an unsettled market environment.

Keep calm in the event of a price slump

In the event of a sharp fall in the share price, it is important to remain calm. A panic reaction and the sale of the share, namely provide in any case for a loss of a large sum. Instead, it is important to realize the reasons for the crash and to draw consequences from it. If the outlook is still good, there is no reason to sell the stock.

Listen to yourself before buying shares

Many self-proclaimed experts offer their services to shareholders at high cost and promise regular profits. A huge business has sprung up as a result, trying to cheat its customers out of their money with conflicting tips. It is better to listen to your own gut and look at the published figures of the company itself, instead of going to the so-called stock market gurus on the glue.

Only trade with existing money

Despite all caution, the stock market remains a shark tank in which not everyone can survive. Trading with credit on the stock markets is therefore the biggest mistake an investor can make. Risks can be minimized (much more than e.g. when trading with a Forex broker), but there is simply no hundred percent security in trading with shares. Therefore, it is better to keep the savings in the savings account and trade in stocks with “leftover” money.

Pay attention to security when buying shares

Fraudsters abound on the Internet. Anyone who trades in shares online must ensure that this is done with the greatest possible security. The smartphone is certainly not recommended for this case. Instead, online trading with shares should better be done with the classic PC, which was previously secured with security software.

Regular observation

As already mentioned, the stock markets can go crazy due to various news. A regular observation of the share price is therefore an important prerequisite to find the right time to buy or sell and to take possible high profits. Furthermore, the observation of the price is a hedge against large losses of the share, which could possibly make a reorientation necessary.

Investing capital in shares is one of the classic forms of investment. In order to be able to become active on the stock exchange online and, above all, to be successful, one must make some preparations and observe some rules.

Create a share deposit

First of all, investors need a share deposit account. The share depot can be either with a bank, or one can open it with an online broker. In the depot, the purchased shares can then be kept and managed. If a share is then purchased, it is available after the purchase in the depot.

Define investment goal before you trade shares

After one has created the share depot thus, the investment goal must be defined. For this, the following three questions are important at first:

Investment goal checklist

  • How much capital is available for the stock investment?
  • How much risk is the investor willing to take?
  • What return do you want to achieve with your investment?

The answers to the questions result in the personal investment goal

The personal answers to these questions ultimately influence the choice of stock investment. For example, investing capital in growth industries can be very lucrative because it promises a high return. On the other hand, this investment is equally associated with higher risks of loss. The long-term investment, on the other hand, can mean higher security at this point – but also with lower returns.

A broad stock portfolio is recommended

Financial experts always recommend a broad portfolio in order to be able to act more independently on the market. If, for example, prices fall in a sector in which you have invested, you still have alternative options in other sectors that are not affected by the fall in prices. In this way, you can possibly compensate for any losses or at least cushion them a little.

Gather information before trading stocks

Before you even make an investment decision, you should gather information about the industry and the company in advance. In addition to stock and investment portals, good sources are the info portals of the companies themselves. News searches on financial portals are also recommended. In addition, current statistics and sales figures of the companies and industries should be consulted again and again, and their development should be observed. Just from these data often trends can be derived.aktienhandel

Test strategies

Even before making a concrete investment decision, it is recommended to test one’s own investment strategy. The ideal instrument for this are sample portfolios, with which the investor can try out his investment strategies without using real money. Various watch lists also offer the option of observing and analyzing stocks.

Buying shares

If one decided now for the shares of a company, one can buy the securities now. To do this, more the broker or the bank the share, as well as the number of shares. It is also important whether the shares are to be purchased immediately, each at the current price, or whether a certain purchase price is determined, from which the securities are to be purchased. If, however, the desired security is not available in the specified period at the desired conditions, the order will not be executed.

Watching the stock portfolio

Shares are mostly intended as a long-term investment. Nevertheless, you should check your securities account from time to time. You should always be up to date on the latest developments on the stock market. The necessary information can be obtained from relevant specialist sources and business portals.

Achieving profits

As a shareholder, you become part owner of a company. On the one hand, as a shareholder, you benefit from the company’s share price gains. On the other hand, you also participate in the profits of the company through your investment. If the company makes a profit, part of the profit can be distributed to the shareholders as a dividend. The amount of the payout then depends on the respective number of shares held in the company. It is not impossible to earn money on the side with stock trading, but no master has fallen from the sky and it takes some effort to achieve this!

Curbing losses when trading stocks

The goal of investing is to make long-term profits with stocks. Consequently, if the return does not meet the requirements, it is also necessary to part with unprofitable investments. The sale of a share functions thereby similarly as the purchase of the security. Thereby the investor gives to his bank or to the broker the order to sell a certain number of pieces of a security. When selling one can specify again individually options. Either one specifies to sell the shares immediately at the market price or one specifies to wait with the sale of the shares until the best price is reached. Another option is that the securities are sold only when a previously determined price level is fallen below.invest in shares

Think long term

  • Often people are too short-term oriented in their thinking.
  • Crises that occurred ten years ago, for example, are forgotten.
  • Accordingly, people should be trained to think in the long term.
  • The Dax at the end of the year is also interesting, but the goal should be to develop a forecast for the period of five years.

Decide rationally

When investing in stocks, decisions should be made as rationally as possible. Nevertheless, emotions such as greed and fear still dominate trading on the stock market. Here it is important to reconsider one’s decisions and not to rush into anything. Before executing an order now, it is better to go through the data and developments (also of the last years) once again.

Additional currency independent investments

It is advisable to additionally bet on currency-independent investments, such as real estate and land. But also here one should inform oneself well before.

Interpret news correctly

  • When buying shares online, it is important to interpret the news correctly. Likewise, one should not immediately react hastily to the smallest positive news.
  • Many investors usually assign a higher probability of occurrence to colorful and comprehensible
    probability of occurrence than the complicated.
  • In order not to make the same mistake, one should not be tempted too easily by positive news to act.

Trading shares with a stop-loss strategy

The stock is automatically sold when the value falls below a certain mark. In this way, you can contain losses and maximize profits. Important: Set the mark correctly.

Buy shares online? Fees?

It is now not at all uncommon to buy shares online. There are brokers specialized specifically for this type of trading and this type of trading is also associated with lower fees. On the other hand, you also do without competent financial advice and trade on your own responsibility. However, for some shareholders, this is what makes their stock transactions so attractive.

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Risk Warning

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Trading with financial products (CFDs, Forex, Stocks, Cryptocurrencies, etc.) in general and with leveraged products especially is highly speculative and not suitable for all investors! The loss of your entire investment is possible. Never invest money you can`t risk losing! Decentralized and not regulated cryptocurrency markets are also a high risk and may lead to a significant loss.

Disclaimer

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