Congratulations on opening your brokerage account, the next step in making your first trade may seem a bit daunting ....but the below should help provide you with educational resources, including demonstration videos, to help you get started and placing your initial investment 

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But before diving into the details below, the following is a simple example of the life cycle of buying & selling your investment whether it's a company Stock, ETF, Index Fund etc....

 

1. Research and Decision

• Action: You research stocks using tools like financial news, company reports, and stock screening platforms. After analysis, you decide to buy shares of a company (e.g., Apple Inc. Ticker: AAPL).

• Reason: You believe Apple has strong growth potential due to a new product launch.

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2. Placing a Buy Order

• Action: Using your brokerage account, you place an order to buy 10 shares of Apple at the current market price of $150 per share ( see below example of how an order entry may look on your broker account)

• Outcome: The order is executed, and $1,500 (10 x $150) is deducted from your brokerage account balance, plus any transaction fees.

• Please note when placing a buy trade you can choose 2 types of orders.

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1. Market Order

• Definition: An order to buy or sell a stock immediately at the best available price.

• Advantages: Ensures the trade is executed quickly.

• Disadvantages: The price at execution may differ from the last quoted price, especially in volatile markets

• Example: If a stock is trading at $100, placing a market order means you’ll likely buy or sell near that price, but there’s no guarantee.

 

2. Limit Order

• Definition: An order to buy or sell a stock at a specific price or better.

• Buy Limit: Executes at or below the specified price.

• Sell Limit: Executes at or above the specified price.

• Advantages: Gives control over the price you pay or receive.

• Disadvantages: The order may not execute if the price doesn’t reach your limit.

• Example: If you place a buy limit order at $95 for a stock trading at $100, the order will only execute if the price drops to $95 or lower.

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3. Holding Period

• Action: You monitor the stock’s performance over time. During this period, you might receive dividends (if the stock pays them) or adjust your expectations based on new information.

• Reason: You hold onto the stock because its price has been steadily increasing, and your initial research still supports the investment.

 

4. Placing a Sell Order

• Action: After six months, the stock price rises to $180 per share. You decide to sell your shares to lock in profits. You place a sell order for 10 shares at the market price. ( see below example of how an order entry may look on your broker account)

• Outcome: The order is executed, and $1,800 (10 x $180) is credited to your account, minus any fees.

 

5. Calculating Profit

• Initial Investment: $1,500

• Sale Proceeds: $1,800

• Profit: $300 (excluding fees and taxes)

• Next Step: You might reinvest this profit into another stock or use it for other purposes.

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To gain some confidence before committing real money, you can setup a "Practice Account" with the  InvestopediaSimulator to simulate Buy, Sell orders and how your investment is reflected in your Portfolio view

 

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