How Can I Buy Stocks Online?

Online brokers, such as E*Trade, Fidelity and TD Ameritrade, provide investors with a platform to buy and trade securities. Many broker websites offer alerts, tools and convenient access to the stock market. In some cases, you might find that the absence of a personal stockbroker reduces cost and hassle, especially as companies continue to update their software and apps.

To buy stocks online, you will be required to open an account, submit investment funds and follow the necessary steps to make a transaction.

But before you start investing online, you need to ask yourself, “How can I buy stocks online?” The process is simple and easy enough to understand, but you must first get a good picture of the different types of stocks and online brokers out there.

What Are the Best Stocks to Buy Online?

According to Charles Schwab, the type of asset that you buy should depend on your financial goals and your comfort level with financial risk. Investments with greater risk often yield a higher return.

1. Stocks

Stocks represent ownership in a company. Stocks provide income from dividends and the sale of shares. Stocks should not make up all of your assets. Stocks are a wise investment in a bull market but, in a bear market, the price can go down. When purchasing stock, consider factors such as the company’s performance, industry trends and the economic environment.

2. Exchange Traded Funds (ETFs)

ETFs are traded on stock exchanges and often follow the trend of an index. They are used to balance out a portfolio and are low in cost compared to mutual funds. Unlike mutual funds, which are traded when markets close, ETF prices can change within the day. Gains from ETFs are subject to less tax than mutual funds because of a lower turnover rate; however, ETFs may require a minimum investment, usually one share.

3. Mutual Funds

A mutual fund is a pool of financing from like-minded investors used to trade stocks, bonds, and other money market assets. Investors may be from the same industry and share “mutual” investment goals. Mutual funds offer a diversified portfolio with a mix of securities. Mutual funds suit the conservative investor with limited capital to invest; however, they often have additional fees.

4. Bonds

Bonds represent the debt of a government or corporation that uses your investment as financing. The bondholder receives a return and a promise of repayment. Bonds are often considered the safest investment because of the steady payments and the return of principal at the end of the bond’s life. Bonds appeal to the risk-averse investor and are also termed fixed-income securities.

5. International Investments

International investments can be made in stocks, bonds, mutual funds and ETFs. The U.S. Securities and Exchange Commission emphasizes the high risk of off-shore investing. Factors to consider include unpredictable exchange rates, political instability and lack of liquidity.

6. Options

According to MarketWatch, options can appeal to the aggressive investor. A buyer trades an asset at a set price during a set period or on a specified date. A call option is an option to buy, and a put option is an option to sell. Options are used to speculate and could be considered risky. For call options, the buyer wants the stock to go up, relative to the original stock price. For put options, the buyer wants the stock to go down.

7. Futures

Futures, or trading of physical commodities, are for the informed investor since it involves hedging or speculating on future prices. Extensive monitoring of the market, industries and world events in conjunction with substantial funds are required for successful futures investing.

8. Foreign Exchange (Forex)

According to FXCM, a foreign exchange broker, Forex is the largest and most liquid market. The Forex market is also fast and volatile. Traders should understand the dynamics of currency rates. Forex trading involves predicting exchange rate changes and extensive knowledge of interest rates, inflation and political climates.

Best Online Broker Services

Searching for an online broker can be overwhelming, especially since there are so many to choose from. Based on your budget, financial goals and preferences, the right broker for you might differ from the right broker for someone else. Still, here are five recommended online brokers you should consider before choosing one.

Interactive Brokers

Barron’s assessed the leading online brokers of 2015 based on trade experience, compatibility with mobile technology, the range of product offerings, research amenities, cost and more. Interactive Brokers was ranked No. 1 thanks to its upgraded software and account management capabilities. The firm’s mobile technology allows complex orders to be conducted using tablets or smartphones.

Interactive Brokers is also popular for international investing and the sophisticated investor. The $10 monthly commission is waived for accounts with $100,000 or more. Additionally, the firm offers an education center featuring courses, videos and webinars.

OptionsHouse

OptionsHouse offers low commission rates and per contract fees, including a $4.95 flat rate for stocks and 50 cents per contract for options. Currently, the firm is offering free trading for 60 days when you open and fund a new account.

According to Barron’s, this platform offers an alert system that notifies you with news, such as an earnings announcement or insider trades on companies in your portfolio delivered via mobile, email, etc.  In the 2015 review, it scored high for its mobile capabilities, usability, research amenities and customer service education.

TD Ameritrade

TD Ameritrade provides charting tools, pattern recognition, social signals, alerts, advanced screeners and more. Its mobile app allows you to see real-time quotes and charts, and you can trade stocks, options, EFTs, mutual funds and more from your mobile device.

Although TD Ameritrade’s commission fees are not the cheapest — it costs $9.99 per trade for online stocks — you have free access to all trading platforms and trading specialists. You can also trade commission-free for 60 days with a $3,000 deposit or more.

Related: The 10 Best Apps for the Timid First-Time Investors

TradeStation

This online brokerage company is suited for the sophisticated trader as well. When comparing TradeStation with Interactive Brokers, Investopedia pointed out that TradeStation’s biggest advantage is its advanced technologies and tools, which can help predict strategy success. In addition to placing trades, you can customize and analyze charts, receive real-time charts and data, and monitor your account information,

TradeStation has a mobile app available for free download. Pricing varies, but you can choose between per-share or flat-free commission plans for stocks and ETFs: 60 cents per share or a $4.99 flat-fee.

E*Trade

E*Trade has simplified its website and apps for improved navigation for both mobile and static users. The online broker offers sophisticated trading options also, such as risk and portfolio analyzers to make sure your portfolio is diverse enough to help you achieve your goals. E*Trade also provides extensive educational resources, including videos, live events and courses.

The standard pricing for trading stocks, options and ETFs through E*Trade is $9.99. But, you can get 60 days of free trading for deposits totals $10,000 or more.

10 Steps to Buying and Managing Your Stocks Online

After you choose an online broker, it’s time to learn how to buy stocks online. Each online broker might have a different setup, but below are a few steps you’ll likely need to take in order to successfully start trading online.

1. Pick an Online Stockbroker Service

Stockbrokers.com can help you find the best firms for your needs with a full review of top companies and a useful comparison tool. For example, TD Ameritrade is rated highly for its mobile trading app but is rated low for commissions and fees. Consider what is important to you in your transactions: Do you want to be able to trade from a mobile device or are you looking for the most cost-effective broker?

2. Decide How Much to Spend

If you’re worried about spending too much money investing online, start off slowly. Do not invest more in risky stocks than you can afford to lose. Diversify your portfolio, and invest in safer options, such as mutual funds or ETFs.

Read: Is Robinhood the Ultimate Free Stock Trading Software?

3. Consider Your Time

Wise investing takes time, so decide how much time you can realistically devote to research and online transactions. For example, mutual funds can save time because a fund manager makes the selections for you.

4. Open an Account

Once you pick an online broker, opening an account is usually pretty straightforward — most platforms provide step-by-step instructions. You will most likely have to deposit funds electronically into the account before you can start to trade. But, look for an account that doesn’t charge you fees.

For example, a Schwab One Brokerage Account from Charles Schwab doesn’t require any fees to open or maintain an account. A $1,000 minimum investment, however, is required.

5. Perform the Appropriate Action: Buy or Sell?

Whether you want to buy or sell a security, you’ll likely have to place an online stock order. If you want to buy stock, cash will be taken from your account. When selling a stock, cash will be placed into your account.

According to “Mad Money” host Jim Cramer, it’s important to keep your cool when a market takes a downturn and avoid making a bad decision. Selling stock should be done incrementally, and a good strategy is to analyze each stock in your portfolio, rate them and decide which to sell based on a long-term perspective.

“I rate all of my stocks on a scale of one to four,” said Cramer, “the ones being the best buys, the fours being the sells. I swear by this rating system.”

6. Pick the Number of Shares to Trade

Stansberry & Associates Investment Research Center offers a guide for deciding how much stock to buy or sell. Companies with a large number of shares available for trade tend to have a small bid/ask spread, and companies with fewer shares available tend to have a higher bid/ask spread. There is no right or wrong number of shares to buy, but diversifying is safer.

7. Choose a Company

Research the companies that interest you. For example, ask yourself, “Under what terms will you sell or buy stock?” Popular sources for online stocks are Google Finance, Yahoo Finance and your online broker.

8. Enter the Company’s Ticker Symbol

Yahoo Finance or another site can help you look up companies’ symbols. So if you input Microsoft, you’ll see the ticker symbol (MSFT), stock quote, dividends and more. Other ticker symbols for popular companies you’ve probably heard include: Apple Inc. (AAPL), Wal-Mart Stores Inc. (WMT), The Walt Disney Companies (DIS) and Facebook, Inc. (FB).

Keep reading: The Best Investment Advice From Warren Buffett and 11 Other Investors

9. Select the Price

For a basic trade, your choices are usually market orders and limit orders. The U.S. Securities and Exchange Commission (SEC) states that a market order won’t allow you to control the price of your order. As Fidelity explains, it allows the online broker to sell or buy the securities at the next available price in the market. According to online broker TradeKing, when you enter a market order to buy, you should pay attention to your stock quote’s ask price; when selling, pay attention to the bid price.

Meanwhile, a stop order “is an order to buy or sell a stock once the price of the stock reaches a specified price, known as the stop price,” states the SEC. According to Fidelity, these orders can protect your profit or prevent further loss.

A limit order, on the other hand, gives you more protection by allowing you to buy or sell a security at a specific price. And a stop limit order allows you to buy or sell at a specific price or better after the stop price has been reached.

10. Submit Your Order

Once you have filled out the designated fields on your stock order, it’s time to submit it. After that, make sure you monitor your purchases and track your investments.

For example, use the data and reports from your online broker to analyze your investment choices. And definitely take advantage of the tools and resources that your online broker provides.

This article originally appeared on GOBankingRates.com: How Can I Buy Stocks Online?

This article by Caroline Banton first appeared on GoBankingRates.com and was distributed by the Personal Finance Syndication Network.