Hey, this is Sasha, and in this video, what I want to do is share with you the step by step process to placing a trade and buying some shares of stock.
You’ll see right now, right here what you’re looking at is a trading panel or platform, just like checking your email, there’s a platform, a way to compose a message, a way to send a message, read a message. This right here what you’re looking at is a trading platform and panel, and it’s a way to buy and sell shares of stock.
To do this, you need to have a broker, and you need to have deposited some money and funds already into a brokerage account. If you haven’t seen how to sign up for a brokerage account, then see some of the other videos listed in the description under this video, and you’ll be taken to those videos to show you how to sign up for a brokerage account.
You can do this with pretty much any broker, the panel might be slightly different, but the concepts and the processes are still very much the same.
Let’s take a look at an example of putting on, buying shares of stocks so that way you can see exactly how to do it if you’ve never purchased any stocks in the past before.
Making a stock trade
The process to be able to do this and accomplish this is number one, you need to know which stock you’re going to buy or sell. You need to see the company, whether that’s an Apple, a Google, a Facebook, you need to know which stock you want to trade.
The next step would be to buy or sell. In the stock market world, just like in the real world, you can either be a buyer or a seller. You could either buy food and groceries, or you could be a seller of food and groceries. You could be the supermarket or the business owner.
You need to know and understand how to buy or sell, in this example we’ll talk about buying because if you sell something without having it or owning it, you’re going to be short that stock. We’ll talk about buying in this example.
The next thing you would need to know is the ticker symbol, and the ticker symbol is just the shortcode for that company. For example like Microsoft would be MSFT, Exxon Mobil would be XOM, Google would be GOOG, so you’ll learn these through time, the more trading that you do, or you could look those things up.
You need to know the quantity, the number of shares you’re going to be purchasing, because they trade based on a per share basis or a per share price.
Then fill in the order type and your price if you’re doing a limit order, and then hit the button and confirm.
Let’s go through all these steps so you can see exactly step by step what it is that you’re doing or what you’re doing to buy some shares of stock.
Choosing a stock and finding the ticker symbol
The first thing you need to do is pick and decide which stock you’re going to buy or sell. In our example, we’re going to be doing Facebook. We’re going to be buying it because we’re not going to go short. So we already have those first two parts of that process complete. In knowing what we want to do.
But if you don’t know the ticker symbol, you can go to a website like Google finance, and as you search for things, you can see as I type in Facebook, they have right there the FB is the ticker symbol. If I click that, you can see that the ticker symbol directly there is FB, and this is just one of the ways to get the ticker symbol if you don’t know it. There is my ticker symbol FB, and that’s what I need to know.
In some trading platforms and panels, they will show you this, but let’s look at maybe another company example like, let’s say, Harley Davidson. You can see if I type in Harley Davidson, the ticker symbol HOG and it’ll tell you the price per share right there. The opening price as well for the day.
Anyways, that’s how you get the ticker symbol, if you’re doing it on the trade panel or platform, what you can do is go into the trade, in this example, if I start typing Harley Davidson, you can see it’s right there, Harley Davidson Inc. company HOG. If I click it right there, you can see it’s $59.75 per share. Not for the whole company, this is per share. And everybody is trading a different amount of shares.
If you have let’s say $100, you could probably only buy one share, because it’s $60 per share. For two shares, $59.75, if you take out a calculator, and let’s say you want to buy 100 shares times $59.75, you’re looking at around $6000.
Keep in mind you need to pay for commissions, so I like to give it a little extra cushion, so $60 times 100 shares, you’re looking at about $6000, that’s what you’re looking at if you’re looking to buy the stock or 100 shares of that stock.
The next thing to do is, now that we have the ticker symbol, we know what we want to do, here is the bid, here is the ask, this is what it’s currently trading on, if you're going to look at the chart, you could go to the chart panel or area, and type HOG and you’ll see the chart based on the daily, or you could do it on the minute, this would be for the day, you could do the 5 minute, that means each bar represents 5 minutes, 30 minutes, they have daily charts, weekly charts, yearly charts — all kind of different things.
And the same thing, you could say HOG chart. And now what it allows you to do is, if you go to one of these chart companies, you can see the chart for Harley Davidson right there, that’s the one year chart. You can change these time frames, and you can go to a five-year chart and play with that, that’s just all personal preference.
Now what you do is, you’re ready to buy. Let’s say you decided you wanted to buy this stock. So right here what you can do is, you can go to the bid or the ask right here, and you could say, I’m just going to click it, and then these things will pop up. I like doing it more of a manual approach, and it’s just a little safer for me.
I’ll right-click and go to “buy” in the think or swim platform, for you there might be a button somewhere. There might be some other kind of thing in some other area, just depending on the platform you use, for me I’ll go to right click and buy, and now this order entry tool comes up.
If you notice right here, this came up right there, and it automatically fills in a certain amount of shares. This is the number of shares, and we talked about that as being knowing and understanding how much you want to buy, that’s our quantity, that’s our symbol, make sure everything is correct, it’s kind of like filling out a form online for your order. Buying an Amazon order, or when you’re buying products, paper, printer ink, whatever it is, you want to make sure everything is correct, so the same thing here.
Market order vs. Limit order
You’re buying the stock, 500 shares, Harley Davidson, there is the stock, and here is the price, you could do a market order, or you could do a limit order.
You have different order types, and the main two is a market order and a limit order. The market order, just like you go to a restaurant, you buy fish, sometimes it’s at market price, it could be $20 for the meal, it could be $10 for the lunch, it could be $100 for that market price. It just depends, the market price you need to ask and see what it is.
In the stock market it’s usually not a big deal if the stock is liquid, so here you can see there is the price, the bid, and the ask, often you’ll get somewhere in there, because the volume, the amount traded for that day I pretty large.
If you see that volume, let’s say maybe 50 thousand shares, that market price could skyrocket right away because you want more shares, so it just depends on the supply and demand.
In general, I like to go with the limit price, that’s a little bit safer. What you could do is bump that limit price a little bit higher, just to give you a couple of extra wiggle room, because if you’re trying to get a reasonable price, let’s say a little bit lower, you’ll probably won’t get filled, which I’ll show you here in a second.
Here let’s say we do 100 shares, change my share quantity, go ahead, best exchange, order type is limit. There is our limit order, I bump it up, I’m trying to get a better price right here than the current rate that’s being traded, and you’ll probably won’t get filled.
All you need to do last is just hit confirm, and you can see there’s all my break down, it costs me about $6000, plus about $10 to execute the trade or process the order.
Setting the right price
I’ll go ahead and hit send, and now what you can see is, it’s working, it’s working order, but it’s not filled yet, I still don’t have my 100 shares. And that is in part because as you look at this, the effective price is $59.78, but I want to get it at $59.60, but it doesn’t always work that way in the market.
Sometimes what you need to do is right-click, and let’s say cancel and replace the order, and you might need to move up in price. You can see right here on this expected price grid, somewhere in the middle would be a reasonable price. If you go beyond it, you’ll more than likely get filled. But the point is you don’t want to pay $68 when you can get it for $59.
Completing the order
I bump it to 59.80, hit confirm and send, you’ll notice right there, there’s a little box that pops up that says “You’ve been filled.” And the working order now went into the filled order, which you can see right here is the Harley Davidson order.
All these other things down here are just other orders that I did earlier as examples for another video, but you could see that right there, I’ve got filled at $59.80 and if you go ahead and you look right there, there are our 100 shares, cost us, a buying power about $3000, but apparently it’s a $6000 trade.
In either case, that’s our position right there, and with time, you will see this slowly moving around, as this stock moves around, you will see the profit and loss also move around. Right now it’s not really moving too much, you’ll see it with time, this will shift and move around and wiggle, as you continue to watch those prices.
After I waited a few moments here, you can see that we’re basically down about $4, just due to the stock price movement right there, you can see Harley Davidson, down about $4, that is only due to where the stock moved. Now it’s moving $3, and you know that it basically will shift, and the more shares that you have, the more it’s going to wiggle around. That’s basically how you would go ahead and put on a trade step by step.
Selling your stocks
Here is a quick little bonus, in order to sell or get rid of this, you could right click and just say create a closing order, and sell the Harley Davidson position. The same thing will come up again, you can see it’s right there 100 shares, you could change it to a limit order, because you want to sell it for a higher price typically and then again, you go ahead hit confirm and send.
Make sure this lines up correctly, because if you go to let’s say 120 shares, you’ll be short shares, if you only sell, let’s say 50 shares, which I’ll show you in this example, you’ll only get out of 50 shares, you’ll sell half of your positions.
I go ahead, hit confirm and send, I got out of 50 shares, so now I have 50 remaining, or 50 long to the upside.
That’s why sometimes when people say I sold $50, that doesn’t mean that they’re actually selling and getting rid of all the stock, you’re still long or positive 50 shares.
And you could say I’m going to go ahead and get rid of Harley Davidson a little bit more. I’ll go ahead and sell this time 75 shares. This would make me short 25 shares because I only have 50 shares.
Market orders get filled faster, but the rates might be bad
-75, I could change it to a limit order, again and put it in my price. I’m going to do market order this time, all I need to do is hit confirm and send and then again send that order in, and now boom, you can see I’m filled in that order.
You usually get filled a lot quicker with a market order, but sometimes you get lousy fill rates, so that’s the disadvantage and the advantage to them. You get filled faster, but the prices might be a little worse.
You can see I’m negative 25 shares. Which means, eventually I have to buy back another 25 shares to get back to even, because here I’m short, which is a little bonus video for you, so I a buying another 25 shares. Confirm and send, send that in, and boom, you’re in.
And you see, as you get into this, and you do it more often how quick you can do it, now I’m zero on my positions, and that’s it.
Whatever profit or loss I made, I can withdraw that from that account, but that’s ultimately how you buy or trade stocks step by step.
Ultimately, that’s how you go about placing a stock trade, and that’s how you manipulate things within your trading panel.