So you've opened your trading account with your selected broker and it's time to make your first stock purchase. Let's take a quick look at an actual trading screen shot:
The trading screen on your platform may not match the layout shown above exactly, but you should see similar information.
1. IBM is the ticker symbol for this stock. I'm sure you can guess which company's stock we are buying here.
2. If we wanted to sell the stock the Bid is the price that we would get. Notice how the Bid price is less than the Ask price.
3. Since we are buying IBM stock we will be paying $178.66 per share since this is the Ask price.
4. Today we are buying the stock. In the future when the price goes up we can come to this same screen and select the Sell option.
5. The quantity is simply the number of shares that you want to buy.
6. The Order Type for this trade is limit. This means that the trade will not be executed unless the price is at or below a price that we specify. In this example the limit price is $178.25 per share.
7. This is the price that we are willing to pay to buy one share of IBM stock. The trade will not be executed until this price is available.
8. We can specify how long we want our trade to stay open. In this example it is just for the day. If the trade is not executed by the close of the market it will be deleted. You can also elect to make a Good-Till-Cancelled (GTC) trade that stays open until you close it or it is completed.
Once all the information is entered correctly you will select the option to review and then place the trade.
Other Order Types
When placing a buy or sell order you have a few options regarding the types of orders you can place.
Limit (Buy) - The stock will not be purchased unless it is at or below the specified price.
Limit (Sell) - The stock will not be sold unless it is at or above the specified price.
Market - The stock will be bought or sold at the current price at the time you place the trade.
Stop (Buy) - The stock will not be purchased unless it reaches a specified price higher than the current market price. Once the higher price is reached the order turns into a market order.
Stop (Sell) - The stock will not be sold unless it reaches a specified price lower than the current market price. Once the lower price is reached the order turns into a market order.