It is incredibly easy to buy stocks on the internet these days.
No matter which country you live in, you can easily buy stocks in all of the world’s biggest stock markets — including the US.
Here are the 3 simple steps to buy stocks online.
1. Open an account with a trusted online stock broker
There are literally hundreds of different brokerage companies available that allow you to buy stocks on the internet.
I personally use and recommend Interactive Brokers, which is one of the largest online brokerages in the world.
Unlike most brokers, Interactive Brokers has incredibly low fees and even pays you a good interest rate on the spare cash in your account.
You can set up an account and buy stocks, bonds, ETFs and all sorts of other financial products from all over the world. There is no minimum deposit required to open an account.
If you live in the US, then you may also want to consider Robinhood, which is a free app that offers commission-free trades. I don’t recommend it for serious investors or traders, but it is good enough for beginners.
How to set up an account with Interactive Brokers
Here are the 5 steps to create an account:
- Go to the Interactive Brokers home page (opens in new tab).
- Click “Open Account” in the menu bar at the top.
- You will most likely want to choose “Individual Investor or Trader”.
- Click “Start Application” under the “Individual, joint and retirement accounts” area.
- Now fill in your details, click “Save & Continue” and then proceed with the application process.
It can take a few days for Interactive Brokers to review your application. After that, you will need to send them some money to add to your account so you can start investing.
Bottom line: The first thing you need to do is to open an account with an online stock broker. Interactive Brokers is the best one, but Robinhood is also a good alternative for beginners who live in the US.
2. Download the trading software on your computer, tablet or phone
After your account has been activated and funded, you need to download the trading software on your computer or phone in order to buy stocks.
If you are using a computer, then the trading software is called Trader Workstation. Here’s how to get it:
- Visit the download page here (opens in new tab).
- Click “TWS Latest”.
- Click “Download”
- Now open the file and install the program on your computer.
If you are using a smartphone, then the trading app is called IBKR. Here’s how to get it:
- If you have an iPhone, visit this page and install the app.
- If you have an Android phone, visit this page and install the app.
After you have installed the trading software or app on your computer or phone, click on the icon and log in with the username and password you set when you signed up for the Interactive Brokers account.
Bottom Line: Most online stock brokers offer some sort of trading software, or enable you to buy stocks through a web interface. Many of them also have free apps that you can install on your phone to trade with.
3. Enter the stock into the software and buy it
After you log in to Trader Workstation, you should see something like this. The top box called “Order Entry” is where you type in your order, the window below shows details about the stock.
Assuming that you already know which stock you are going to buy, then here is the process:
- Enter your stock ticker in the white box in the top left corner. In the example screenshot, I used AAPL, which is the ticker for Apple Inc.
- Choose “Buy”
- Under “Qty”, enter how many shares you want to buy.
- Select “LMT” to set a limit order.
- To the right of “LMT”, enter the price that you are willing to pay.
- For “Day”, you can also select “GTC” if you want the order to stay open until it is completed or canceled.
- Click “Submit”.
- Review all the details in the order confirmation.
- Click “Transmit”
If the market is open and the price you set is equal or higher than the trading price, then your order will get filled immediately.
Congratulations! You have succeeded in buying a stock online. You are now officially a part owner of the company whose stock you bought.
Bottom Line: Buying stocks is very simple once you have the trading software on your device. You enter your stock ticker, select how many shares you want to buy, set the price you are willing to pay and click a button to submit the order.
Things to keep in mind
You should really do a lot of research before buying stocks, even if it’s in safe and steady companies like Apple.
There are no refunds when buying financial instruments and you are responsible for your own trades. If you make a mistake and the stock drops then you will lose money. Stocks can and sometimes do go down to zero.
For this reason, it is highly recommended that you consult with a qualified financial adviser before investing a lot of money.
You may also want to consider buying ETFs instead of stocks. These are like buying a basket of stocks, such as all the companies in the S&P500. ETFs are considered a more diversified and safer investment than individual stocks.
If you are buying stocks traded in a different currency than your own, then you also must consider the currency risk. If your currency’s value changes relative to the currency the stock is traded in, then this can affect how much money you make.
Bottom Line: Investing in stocks has various risks and mistakes can cause you to lose all of your money. For this reason, you should be very careful and preferrably get advice from a qualified financial adviser.
Buying stocks online is easy, but it should be approached with major caution.
It’s not just about buying the right companies, but also making sure that they are trading at a fair price.
It’s a very good idea to read some books about investing before starting to invest in individual stocks.