How to buy shares
阅读时间 ︰ 14 分钟
The complete guide on how to buy shares in 2019
In this article, you will find everything you need to know to invest in the stock market:
Find out how to open a securities account or a share trading account, which type of account to choose, how does the stock market work, how to choose the best shares and investments, how to execute market orders and which share strategy to use.
How to open a securities account and configure a share portfolio with Admiral Markets
- 1.Open an Admiral Markets trading account
- 2.For a MetaTrader 4 (MT4) account: select Admiral.Markets
- 3.For a MetaTrader 5 (MT5) account: select Admiral.MT5 or Admiral.Invest
- 4.Select the shares you want
- 5.Choose companies with the best long-term growth perspectives
- 6.Select how many shares to buy according to your budget
- 7.Choose a type of order: market or pending order
Please note that with Admiral Markets, cash trading is only available on the Admiral.Invest trading account, on the MetaTrader 5 platform. All other Admiral Markets trading accounts offer CFD shares with leverage.
Now, find out how to buy shares online.
How to choose the best shares to buy
Once you have opened and funded your trading account, you can start choosing shares for your investment portfolio. To begin with, you can search for shares from companies you know as a consumer. The amount of information and the prices updated in real time may overwhelm you. To avoid this, you should first focus on the companies that you wish to acquire shares from.
One of the greatest investors of all time, Warren Buffett, once said, "Invest into a company because you want to own it, not because you want the shares to rise". Start by examining the company's annual report and the management's annual letter to shareholders. These elements will allow you to:
- Observe how well the company is doing
- Get an idea of its performance
- Understand the company's projects and development perspectives
In addition, all the tools you need to analyze company shares are available on your broker's website and on the trading platform:
- The latest news
- Press releases
- Meeting transcripts
- Updates of quarterly results
- Exchanges with regulators
- Stock market dividends paid to shareholders
Many brokers like Admiral Markets regularly publish articles, news, tutorials and webinars on their trading tools, how to use them, and the best shares of the moment.
How to make an investment decision regarding shares
If you are a beginner, and this is your first share portfolio
You should probably start by investing small amounts in the first place. You could start by buying a single share to find out how it feels to hold a share of a publicly listed company. This will help you to know whether or not you have the patience to deal with small losses in the short term in order to get greater profits in the long term without too much stress.
If this first purchase is successful, you could then start to buy more shares and invest a more significant amount, repeating this process each time you feel comfortable with the new amount invested.
If you are an experienced stock trader
First of all, you will have to familiarize yourself with the trading platform if you have never used it to manage a portfolio. In this period of adaptation, it is advisable to use only a small part of your investment capital.
Once you are familiar with the platform, you will be able to invest all your capital in the stock market and build your share portfolio according to your investment and diversification strategy.
How to buy shares with market orders
When you place a market order, you buy or sell shares at the best available price on the market. A market order is not linked to any price parameter; therefore your order will be executed immediately and will generally consist of several small orders unless you are trying to buy a large number of shares (for example an order of several million euros). In such a case, your order will probably consist of several important orders.
With market orders, the price at which you buy or sell shares is not necessarily the same as the one indicated a few seconds before. Indeed, supply and demand prices (the bid and the ask price) vary continuously throughout the day. Market orders are suitable to buy or sell shares that do not experience high price volatility during the day, such as shares of large multinationals rather than shares of smaller companies that are more likely to be volatile.
- A market order is suitable for investors who want to buy a share and keep it in their portfolio in the long term because they do not worry about small price differences when the order is filled. However, they still need the order to be fully executed
- Place a market order on a share even when the market is closed: your order will be executed at the first available price when the market opens
- Check the disclaimer relating to the execution of your broker's orders. Some low-cost brokers gather all their clients' transactions on a financial instrument and execute them at a given price, at the same time each day, the end of the day or even the end of the week
How to buy shares with pending orders
To better control the execution price of your stock trading transactions, it is better to use pending orders. For example: let's suppose you want to buy shares from Apple. At the moment, one share is traded at $100, but you think $95 per share is more in line with your estimation of the stock's value. By placing a buy pending order (buy limit), you ask your broker to wait until the share value reaches $95 before executing your buy order.
Conversely, for a sell order, you ask your broker to wait for a price higher than the current market price to short sell. Pending orders are particularly interesting for investors trading shares of smaller companies, as their spreads may be higher depending on the volatility. This type of order can also be useful for scalping in periods of high volatility.
Conditions associated with pending orders:
- AON - An AON (All Or None) order will only be executed if all the shares you want to buy are available at the indicated price
- GFD - A GFD (Good For Day) order will generally expire at the end of the trading day, even if the order has not been executed
- GTC - A GTC (Good Till Cancelled) order will remain pending until the trader cancels it or until the order expires
A pending order guarantees a trader that his order will be executed at the indicated price. However, the order may not be executed. Pending orders are generally executed on a "first placed, first executed" basis, and are systematically executed after market orders. In addition, the share must remain on the price you have indicated long enough for your broker to have time to execute your order. Finally, some brokers charge additional commissions to traders and investors using pending orders, which is not the case with Admiral Markets.
You should always keep in mind that a pending order that is not fully executed (only a part of it) can still be executed in the following days. Transaction costs are generally applied each time a trade is executed. If the price of a share has never reached the price you indicated for your pending order at the moment your order expires, then your order will not be executed, it will simply be canceled.
What are the different types of shares
On both MetaTrader 4 and MetaTrader 5 trading platforms, shares are distinguished in two categories, European and American shares. Therefore, you can buy French company shares, but also foreign company shares, according to your preference.
To know how to buy foreign or French shares from your trading platform, you just have to do as follow:
With the Admiral.Invest trading account, you have access to more than 4 000 American and European shares.
How to buy American (US) shares
On the American side, you will find the most famous and traded shares with:
- JP Morgan Chase
Have you ever wondered how to buy Facebook shares or how to buy high-potential shares in the hope of seeing their price explode?
In this case, do not hesitate to monitor the shares that make up the Nasdaq index. It is the index of American new technology companies. You can also monitor other indexes and trade shares according to the index they belong to.
How to buy European (EU) shares
On the European side, you will find the most famous and traded shares with:
- Société Générale
As with American indexes (Nasdaq, Dow Jones, etc), you can find European shares according to the index they belong to.
How to diversify a share portfolio
The key to any investment portfolio is the diversification of shares to limit risks.
To diversify your portfolio, several asset allocation methods are available.
- Allocation of shares by country
The first method to diversify your trading portfolio is to compose it with shares from different countries. For example, having shares from American, French and British companies.
If your share portfolio represents 100%, and you want to make sure to diversify your risk, you could buy 33% of American shares (from the S&P 500 index), 33% of British shares (from the FTSE100) and 33% of French shares (from the CAC40). Therefore, if the economy of one of these countries were to find itself in difficulty, and consequently the shares that make up the index of this country, then the impact on your portfolio would be limited. The more diversified your portfolio is, the less impact you will have.
Investing online in stock market indexes from several countries is wise, but not necessarily sufficient to limit risks as much as possible.
- Allocation of shares by business sector
Another share diversification solution is to invest in different sectors of activity.
Indeed, there are many sectors of activity: banking, pharmaceuticals, technology, etc.
As with country allocation, diversifying your portfolio using the sector allocation method involves choosing different sectors of activity, and then allocating your capital proportionately between each of these sectors.
Therefore, it will be necessary to buy BNP, Société Générale, Goldman Sachs, Deutsche Bank, etc shares for the banking sector, Facebook, Alphabet (Google), Apple, etc shares for the new technologies sector, or Peugeot, General Motors, BMW, etc shares for the automotive sector.
To ensure that your portfolio is optimally diversified, and to limit risks as much as possible, it is advisable to use both share allocation methods: divide your portfolio by country, and then within the part allocated to each country, allocate shares by sector.
When is the best moment to buy shares
"Our goal is to find an outstanding business at a sensible price, not a mediocre business at a bargain price" Warren Buffett.
What better way to make money with shares than to follow the advice of one of the best investors of all time?
What this quote means is that to succeed in the stock market, it is essential to analyze companies, their balance sheets, and make sure to buy shares from undervalued companies with solid fundamentals and good growth perspectives.
Therefore, it is important to analyze a wide range of companies. Once you have identified high-potential companies, it is advisable to monitor them until they have temporary difficulties. The value of their shares will then be lower than their actual value. This is the best way to make attractive profits and be successful in the long-term.
On the other hand, you should be careful with companies whose share prices increase for no real reason.
In fact, you will respect the stock market adage: "Buy on the lowest and sell on the highest".
Which shares to buy in 2019
Many financial analysts and market experts anticipate a stock market crash or correction in 2019.
Indeed, the main world stock market indexes (and so shares which compose them) began to fall at the beginning of October 2018. This decline is even more significant in technology stocks.
This is typically a market configuration in which it may be appropriate to apply Warren Buffett's analytical method into your share trading strategy. You can also complete your strategy by integrating price action indicators in order to have a better reading of prices by eliminating the "market noise".
Invest in the stock market with the Supreme Edition of MetaTrader
How to invest in the stock market without losing money? The MetaTrader 5 Supreme Edition's Mini Terminal tool does all the calculations you need to help you manage your stop loss and your money management.
All you have to do is define your acceptable loss; in other words your stop loss. Once you know where to place your stop loss, all you have to do is:
- Enter the number of pips or points in the "S/L" part of the "Lot Size Calculation" included in the Mini Terminal
- Enter in the lower part "Fixed cash risk: EUR" the amount in euro that you are willing to risk
- Click on "Set lots"
The Mini Terminal will then calculate in a few seconds the position size needed to represent a stop loss of 50, 100 or 1,000€, depending on your criteria and the amount you have on your trading account.
We remind you that this tool is also available for MT4 with the MetaTrader 4 Supreme Edition.
The Supreme Edition of MetaTrader also includes the Market Scanner tool, which will help you to identify the most volatile stocks which could present interesting opportunities.
Application to buy shares
Now that you know how to buy shares from a company, and more broadly how to trade stocks, the next step would be to discover the MetaTrader suite.
With the MetaTrader 4 iPhone, MetaTrader 4 Android, MetaTrader 5 iPhone, and MetaTrader 5 Android applications, you can monitor your share portfolio at any time.
Therefore, you can manage your open and pending positions. You can also open positions, and place the stop loss and the take profit from your smartphone.
Admiral Markets provides you with free and unlimited demo accounts to give you access to real market conditions. This allows you to test your price action strategy in complete safety. These accounts allow you to try US and EU share trading without risking any real money!
About Admiral Markets
As a regulated broker, we provide access to some of the most widely used trading platforms in the world. With us, you can trade CFDs, shares, and ETFs.