What goes into buying and selling shares of stock?


Quick Answer

Buying and selling shares of stock involves determining the amount of capital to commit, selecting a broker, and placing the appropriate trade, reports the Houston Chronicle. Several brokers are available that offer different fees and investment requirements, states the Nasdaq website.

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What goes into buying and selling shares of stock?
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Full Answer

Investors must determine how much to commit and if trading on margin is necessary, notes the Houston Chronicle. Trading on margin allows an investor to buy more shares than the cash alone can purchase. While this approach allows for more purchasing power, investors have to pay back these borrowed funds.

Common online stock brokerages include OptionsHouse, Fidelity, Scottrade, Schwab and TradeStation, reports Nasdaq. Each brokerage offers unique features such as mobile trading access and certain promotional offers. Investors must consider all commissions, as most brokerages charge a fee on each trade. Investors can also choose a brick-and-mortar broker that trades money on behalf of the investor, explains the Houston Chronicle.

After setting up a brokerage, an investor must choose to either buy or sell. Common buy orders include market or stop orders. These types of orders impact the price an investor is willing to pay. Sell order types include market or limit. A sell market order executes based on active price at that time. A sell limit order ensures no less than the price an investor wants, but does not guarantee that the trade executes, notes the Houston Chronicle.

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