How to purchase stock online

Stock can be a wonderful investment, as long as you know and understand how the stock market works and are educated about what you are buying. Stock shares are small ownership stakes within a company that allow you to benefit from profit and growth of that company. You also, however, share in losses. If you have some basic education investment, it is easy to buy stocks online.

Set up an account

The first thing you need to do if you want to buy stocks online is to set up an account with an online brokerage firm. To execute a stock trade, you must be able to buy shares on the open market or sell shares on the open market. Today, while there are still traders on the floor of the stock exchange, buying and selling on the market is almost entirely computerised. You need to have access to a broker to place orders on this computerised system though. By signing up for an online broker, you will be able to buy and sell shares on the most popular and widely used exchange markets including the New York Stock Exchange (NYSE). Brokerage firms that exist online that allow you to sell stock and buy stock yourself include Fidelity.com and Scottrade.com among others.

Fund your account

To open your account before you can purchase stocks, you will generally need to provide basic information like your name, address and social security number. You will also need to fund your account. Most brokerage firms let you do this by depositing electronically from a bank account. You may also be able to send in a check. You need to put enough money in it so that you can buy a sufficient amount of stock to ensure any profit you make is not lost to paying commission.

Execute buy and sell orders

The brokerage firm you open your account with will allow for buying and selling shares using the 'trade' option in your account. You may place a market order, which means you buy or sell the stock at whatever it is currently selling for. You may also place a limit order, which means that you will only buy or sell if the stock hits a certain price.