When it comes to placing your first stock or exchange traded fund (ETF) trade online once you’ve opened up a new brokerage account, it’s important that you understand all of the different parameters associated with placing trades on your brokers website, along with the different order types, special instructions on orders, GTC vs day, and so much more.
So, in this tutorial, I want to walk you through placing your first stock trade online, and hopefully make it easy for you, so that when you go to actually place the trade with your broker in real life, you will know what you’re doing!
I will be defaulting to TD Ameritrade for this just to let you know, but this will be the same / very similar template for placing your first stock trade with your broker online anyway.
With that being said, let’s get into it!
Placing the Trade
For this example we are going to use a simple buy for AAPL or Apple stock of 10 shares.
Let’s assume that you just deposited about $1500 in your account, and Apple just traded at $140 per share approximately. Since Apple was just trading at around $140 and you want to buy 10 shares, the total amount of the trade comes up to $1400. You’ll also have to factor in if your broker charges a commission for placing a trade online, but most brokers charge $0 commissions for exchange listed stocks these days anyway.
As you’ll see above from the order ticket below when I put it in on the TD Ameritrade interface, you’ll notice several boxes. Let’s go over those now.
Action
To buy or sell Apple is the question? If you want to buy Apple, you obviously hit buy, and once you’ve bought, if you want to sell, you hit sell for the action.
Quantity
The number of shares you want to purchase. For this example, you want to purchase 10 shares of Apple ($1500 deposit / $140 per share = 10 maximum shares you can buy anyway)’
Symbol
This is the ticker symbol in which the stock you’re buying trades. For Apple stock, the ticker symbol is AAPL, which in this case
Order type
This is probably the trickiest part and where most people get confused. For buy orders though, there’s two primary order types you will be using most of the time.
The first one of these order types is a market order, which is an order to buy/sell a stock at the next available price, or “at market” as some folks like to say. Market orders are an immediate execution at whatever price is available for the stock.
If Apple is trading at $140 per share for example and there are 1000 shares for sale at that price, then if we put an order in to buy AAPL stock at market, we would expect to get filled at that price approximately or around there for our 10 share trade, but market orders are never guaranteed to execute at a specific price.
A limit order on the other hand, would specify a specific price that you want to get executed at, or better. For example, say Apple is last traded at $140, but you want to try and get filled at $135 per share instead.
You could put a limit buy order in for AAPL stock at $135, and your order could even remain open for several weeks or months until Apple drops to that price if you want (known as a good til canceled order, more on that below). One the price of Apple drops to $135 or lower, your order would go through for 10 shares at that price or better (lower if it’s available at the time of your trade executing).
Time in force
Specifically in the case of a limit order, this is used to specify how long you want your order to be out there on the market for, and also the time of the trading day you would like your order to be executed at (rather regular day session, the morning session, or post market / after hours session).
To give you an example of how this works, you could for example place an order to buy AAPL stock at $135 good for the day only, which means if Apple stock doesn’t drop to $135 before the close, your order would not execute and it would expire (meaning you would have to place another trade if you wanted to try again the next day).
However, if you instead placed the trade as a GTC (good until cancelled) order, you could actually send out that order to remain on the market for several days, weeks or even months until it executes. This means you wouldn’t have to keep resubmitting the order on a daily basis if your limit price doesn’t execute. Instead, you just set one order and forget about it until it expires or it ends up getting filled!
To Summarize
Hopefully this guide helped you figure out at least the basics when it comes to stock trading and how you can place your first trade with your broker.
As mentioned above, when placing trades with your broker you will need to type in the ticker symbol of the stock or ETF you want to trade, mark the action you want to take (either buy or sell), and then put in the quantity of shares you want to buy, the price and/or type of order (limit order to specify a price, and market order to get executed immediately and right away), along with the time in force for the order (either for the day session only or good until cancelled), and also you will need to factor in any potential trading commissions that your broker might charge as well, which would be added to the cost of the trade.
Anyway, hope you guys enjoyed this tutorial on placing your very first stock trade, and let me know if you have any questions or comments below!
