Introduction to Trading: Investing 101

Now that you know about the types of brokerage accounts available to you, and how to choose which brokerage firm best suits your needs, let’s talk about trading! I remember when I placed my first trade I had no idea what I was doing. I ended up placing a market order and wound up spending more than I intended to (we’ll get into order types in my next post). Thus I will begin the introduction on how to place trades, and what information you will need to place one.

So once you’ve decided your ready to begin trading, assuming you’ve already opened up an account with a self-directed brokerage firm, it’s important to know the ticker symbol of the stock your looking to invest in. What’s a ticker symbol? It’s essentially the symbol of the stock you are looking to invest in. For instance, since I have an Android phone, use Google.com, MapQuest, Gmail, and Google Chrome on a daily basis, I may want to invest in Google since I use it so often and imagine several other people do as well. To find its ticker symbol, I would log into my brokerage account and look for a field that says “find symbol.” I would type in the company’s name “Google,” and the following should appear: GOOG. We have found the ticker symbol. Now that you know the symbol you can get a price quote to see at what price the stock is trading at. If you request a quote during normal trading hours the quote will be live, however if you submit the request after normal trading hours, you will either get the stock’s close price, or a pre-market/after-market price. The latter depending if the stock is actively trading during those hours.

So far we have determined how to look up a symbol, and how to get a price quote. What other information will we need? Well we need to determine how many shares you would like to buy. This is entirely up to you. GOOG is a pricey stock; it closed today at $695.25. So if you have more than $700, you can buy 1 share, but keep in mind you still need to pay a commission for the trade. Once you have determined how many shares you would like to buy, you have the task of choosing which order type you would like. Depending on your selection, you will have the ability to choose (if available) an All Or None (AON) order. We will get into order types and the “special instructions” that can come with them real soon, but before we do, we have to go over some Wall Street Jargon. In my next post I will go over some of this jargon which will facilitate your understanding of order types. Until then, hold off on placing trades, you don’t want to make the same rookie mistake I did!