How To Buy Stock

If you have been following my stock market investing site for a bit, you know that I have been advocating that you start to learn how to buy stock. I've also been encouraging you to learn how to buy stocks on your own. For too long, we've been delegating the managing of our money to people who are more interested in making fees off of our money than actually helping us. Let me give you an example. When I first started working, I worked for a bank. People thought I had a cool job which was good for the ego but it really didn't pay well. Anyway, what I am getting at is that most of us have or had a lot respect for people who worked as a bank because we assume that since they work there they know about money and can advise us accordingly.

Now, there are a lot of great people who work for these financial institutions and a lot of my friends are in that group. However, the policies of these institutions run counter to the perception we have of them. A good example are all of the rules that are in place to trip us up to earn a fee. Daily cut off times, overdraft procedures, default interest rates that double to triple your rate for being one day late. Now you tell me, does that sound like someone as a whole that cares whether you succeed financially. I don't think so.

The investing profession, not to be out done also has done a disservice. The best example is the mutual fund that stays fully invested all of the time, no matter what the market direction. The advice to always buy and hold. Not telling people with short investment time horizons that maybe, just maybe, they need to reallocate. Last year was a wake up call especially when everyone lost so much money in the market. Where were they, our trusted advisors?

That's why I think it is very important for you to learn how to buy stocks online on your own using your own advice, your own research and your own common sense. Only by being an active participant will you learn what you need to do. Will you make mistakes. There is no doubt that you will. But I'd rather make mistakes and learn from them than leave my money in the hands of someone who won't learn from it.

The first step in learning how to buy stock online is opening a brokerage account. Find one that you are comfortable with. Most will suit our needs. Don't be swayed by the free trade offers as you probably won't use them anyway. Step two is pick an investment strategy. For me, it's CANSLIM by William O'Neil. He also produces a paper called Investor's Business Daily. Become an expert at it. Learn everything you can about it. Eat, drink and sleep it.

Next, study the market daily and start paying attention to the stocks that are showing potential starting with earnings. The IBD can help you here. Finally start using a trading simulator to start picking stocks to buy. Look at this "paper trading" as your gym. It's the practice facility. Start using it. There are a ton of free ones out there.

You'll learn how to place market orders, stop limit orders and all the mechanics of buying stocks. These tools are invaluable. You can learn so much without even leaving your house.

Now start practicing!