A complete guide with methods how to invest, trading and buying shares in the world’s best companies at the moment. let you discover the different methods of trading and buying shares and our lists of regulated companies. All this at your disposal so that you only have to study the best stocks to buy.

How to buy shares?

Anyone wishing to buy shares (or sell shares if they already own some) will need an intermediary to carry out this operation on their behalf. This is the well-known figure of the stock broker. These, whether physical or online, execute the orders to buy or sell shares that they receive from their clients in exchange, of course, for a commission.

[stock_market_widget type= »comparison » template= »basic » color= »#FFE9A5″ assets= »MSFT,AAPL,FB,GOOG,TSLA,NFLX,AMZN » fields= »name,change_abs,change_pct,volume,dividend_yield,eps,pe_ratio,shares_outstanding,market_cap,chart » links= »{‘MSFT’:{},’AAPL’:{},’FB’:{},’GOOG’:{},’TSLA’:{},’NFLX’:{},’AMZN’:{}} » api= »yf » chart_range= »1mo » chart_interval= »1d »]

Buying shares in cash

  • Cost: this is usually lower than with a bank or traditional broker. However, you should still read the terms and conditions carefully to ensure that the stock broker you choose is cheap.
  • No CFD trading: As with traditional brokers, you will not be able to make use of CFDs. Only if your share packages go up will you be able to make a profit. You will not be able to use leverage either.
  • Account: The account opening process is usually faster than with a traditional broker.

Traditional stock brokers

I’m sure that reading this title conjures up images of films in which shares are traded over the phone from offices full of screaming stockbrokers. Such an image of the typical stockbroker is a far cry from reality today.

For private customers wishing to buy company shares, the most common option is to go to their usual bank, as they usually offer brokerage services. Even so, the buying and selling process is similar. The client, after opening a securities account, will send his orders to his bank and the bank will execute them on his behalf. Simple.

Remember that in order to use any of them you will have to open a bank account with the bank.

Buying shares through bank brokers

  • Cost: the traditional ones are usually linked to large entities, whether banks or companies related to the stock market, so they are usually more expensive than the online ones. They usually charge a commission on both the sale and the purchase, which can mean that, although the share has risen in value, the increase in value is less than this payment and, therefore, no money is earned.
  • No CFD trading: With traditional brokers, you only have the option to trade on rising stock markets. In other words, you cannot trade on market declines, as you can with CFDs (Contracts for Difference). You will only generate profits if your share packages rise.
  • Bank account: to trade with a bank broker you need to open an account with the bank and this process often takes a few days.
  • Lower risk: ideal for those who want to invest in the stock market without taking on the risks inherent in leveraged or short positions.

If you decide to use a bank broker, we recommend that you read the terms and conditions and pay special attention to the fees (maintenance and custody) as they are often very high and, especially when investing in shares with little capital, this can reduce the potential profits from your stock trading activity.

A list of bank brokers that are available to clients residing in Spain can be found here:

How to buy shares

Are you thinking of starting to trade stocks? If so, there are a few things you should know before you start putting your money on the line in the stock markets. This is not Hollywood, nor are you the « Wolf of Wall Street ». This is real and you can make money, but you can also lose money. So take your time, study, research, compare and decide. Take your time. Don’t rush.

As with other forms of investment, buying shares carries a risk of capital loss and this risk may be higher depending on the method of purchase or investment you choose. Remember that when investing, you should only risk as much capital as you can afford to lose. We therefore recommend that you read this guide carefully and choose a stockbroker that offers everything you need.

As mentioned above, there are two main ways to buy shares: through traditional brokers or through online stock brokers. There are several (and not unimportant) differences between the two. Within online brokers for buying shares, there are also two types. For example, some brokers are spot stock brokers while others offer CFDs on company shares. Let us now focus on CFDS.

How many shares to buy in each company

This is a fundamental aspect to take into account before even making our first operation and will depend on a multitude of variables such as our capital, our investment strategy and others. As a general rule, it is recommended to have a diversified portfolio of shares. Remember the saying that you should not put all your eggs in one basket? This also applies to investing. Reduce risks by dividing your capital between the different companies you have in mind.

It is advisable to list the companies we are interested in along with their share prices. With a simple calculation we can find out how much we can afford to buy of each of them. Finally, we can mention another piece of advice that is often heard: buy shares in companies from different sectors. Sometimes a change in regulation can affect a whole sector and if we are too exposed our portfolio could be badly affected.

Types of stock market orders

In the stock market, when an investor wants to buy or sell shares (or any other type of financial instrument), he has to issue an order for his broker (traditional or online) to execute the transaction. Stock market orders can be of various types and here we list the main ones:

  • Market order: these are executed at the current market price at that time.
  • Limit order: in this type of order there is a limit price for either buying or selling shares.
  • Stop orders: these orders are issued only when the price of the instrument reaches a pre-determined price.
  • Stop-limit order: similar to the previous one, in this type of order two prices are identified: the limit price and the stop price.
  • Best Bid: executes at the best price available at the time the order is placed. In the event that the offer of shares does not satisfy the total of the order, the order is executed partially.

Attributes of exchange orders

Irrespective of the type of order concerned, an stock exchange order may have a number of other attributes.

  • Immediate order: an immediate order will be executed on the spot and, if not possible, it will be automatically cancelled.
  • Expiration date: an order valid for a specific period of time. With this we can make our order, for example, valid until the market closes.
  • All-or-nothing order: if the offer does not satisfy the entire order, the order will not be executed.

It is important to make use of the types of orders to buy and sell shares as well as the different attributes to trade safely.

Which shares to buy if I am a beginner

There is no one answer to this question and probably every experienced investor has his or her own formula for finding the best stocks to buy. It really depends on our investor profile and, to a greater or lesser extent, on our knowledge of the market. Someone looking for short term returns will look for companies that are little known but have growth potential. A cautious investor may prefer lower returns but with reduced risks and opt for established companies with a long history of financial success.

In the first group we could include the shares of some companies in the technology sector. Who wouldn’t like to find the new Google? It is a pity that predicting future results is impossible. In the second set of companies we will have banks, oil companies, communications companies or similar. It all really depends on the risk you are willing to take and the goals you have set for yourself. If there is virtue in the middle ground, it may be that combining these two types of investment is a reasonable decision.

On our website you can find information on how to invest in shares of a multitude of companies such as:

Related content and investment guides:

© Copyright 2022 | <a href=" title="