Ordinary shares represent a security in which the ownership form of a company is exercised. Each single stock refers to a share of the capital, and is equivalent to a small portion of the ownership of a company. The main advantage of owning these shares is that the owner of these shares is entitled to a share of the profits made by the company, and in any case the owners of the ordinary shares also enjoy the right to vote in company meetings.
Steps
Method 1 of 3: Part 1: Activating a Brokerage Account
Depending on the level of professional assistance from industry experts you wish to receive, you have the option to choose to open different types of accounts to start investing.
Step 1. Opening the Brokerage Account
You can choose between a partial or complete brokerage service, or an online account.
- Online accounts are the cheapest way to buy stocks.
- The full brokerage service, on the other hand, is the most expensive form because it incorporates the services of highly qualified brokerage agents.
- Newcomers to the purchase and sale of shares may first consider accessing a full service, at least until they have acquired the necessary familiarity to make decisions on trading in shares on their own.
- Open the account by depositing the minimum required to start the brokerage activity (usually around a few hundred euros, sometimes even a little more) and wait for confirmation (up to three days).
Step 2. Choice of own actions
- If you choose to use the full brokerage service, consult your broker which stocks are currently performing best and where they believe the best returns on your investment can be achieved.
- If you opt for online brokerage, you should monitor the share price using the online tools made available by the service. The goal of the stock trading activity is to maximize profits by buying the shares at a low price and then reselling them when prices have risen, making a profit on the difference.
Method 2 of 3: Part 2: Determine the Structure of an Order
There are different types of "orders" for the purchase of shares. Understanding how an order is structured means being able, in the future, to buy the quantity and type of shares you want, whenever their price is within the parameters of your order.
Step 1. Consider placing a Stock Exchange Order
The purchase order for shares on the Stock Exchange takes place immediately after the Order is submitted, and the price is the current price of the share on the market.
- Choose a Stock Exchange Order when the imminent purchase of this type of share is more useful than the price of the share itself. However, the order will be processed at the best price, determined at the time of purchase.
- Stock market orders are frequent whenever a stock price is falling. This type of order can be risky, because prices can also change rapidly between the time it is placed and the time it is actually fulfilled.
Step 2. Consider placing a Limit Order
A Restricted Order is an order to buy common stock no later than a specified price per share. This type of order gives the buyer more control over the prices he pays for the stock; however, keep in mind that by setting the price too low, you risk that the order will never be fulfilled. For example, if you want to buy Starbucks common stock (SBUX) by placing a limit Order at $ 1 per share, it is very likely that your order will never be fulfilled, as the SBUX share price is typically much higher than the limit set.
Step 3. Determine if you want your order to be "All or Nothing" (AON) or "Fill or Kill" (FOK)
These terms determine the conditions under which your order can be canceled after request, if these are not met.
- AON Orders can be fulfilled in full (all the actions you have ordered), or in case of unavailability, they are left unfulfilled until the next request.
- FOK Orders are fully processed immediately or canceled.
Step 4. Choose the time frame within which the Order remains valid
- Daily order: means that the order may or may not be processed during the day in which it is requested (by the close of the stock market).
- Valid until Cancellation: it means that the order will be retried indefinitely until it can be processed or until you choose to cancel it. Typically this type of order has time limits, usually around 90 days.
Method 3 of 3: Part 3: Submit and Track an Order
Once you have identified the subject of your order, the next step will be to communicate it to the broker, who will make the actual purchase of the security on your behalf. At this point it is necessary to observe the performance of the stock on the broker's website or on any other website that presents the stock prices in real time.
Step 1. Submit the order to buy the stocks
- If you choose to invest through a partial or full brokerage service, you should contact the stock broker and let them know your order.
- If you choose an online brokerage service, enter your order using the appropriate form on the brokerage website.
Step 2. Follow the progress of your stock
Most brokerage systems, whether complete or online, offer online tools that allow you to monitor the price of the stock of the company in which you have invested. Watch stock price movements to determine if and when you want to sell them in order to maximize profits.
