How do I go about setting up a brokerage account?
I have never bought a stock before - how do I find a broker, open an account and execute my first trade?
Best Answer
170 points
theFACE answered 2 years ago …
Opening an account and then placing your first trade can be a bit intimidating, so I'll be general and brief...
Let's start with the YAHOO! Finance page, URL: http://finance.yahoo.com/
A little bit down the left column, you'll see a small link to "brokers". If you can't activate the link, just Google any of the names. At their respective homesites, you'll get some idea of what they offer (and perhaps their opinions of themselves compared to the other brokers).
As touched upon by the other TickerHounds, full-service costs more, but you get more guidance etc etc.
Depending on how much you already know, you may either want to have a friend walk you thru your first few trades...or better yet, find a site which allows you to "play trade" (known as "paper trading", a term left over from when folks practiced make-believe trades - risking no real money - w/o the aid of a computer).
On such a site, you'll generally learn not only the mechanics of placing a trade (keeping in mind each brokerage's service can have slightly different formats), but also a wealth of strategies and trading related info. You can participate for free in the competitions - often with monetary rewards for the best players!
Just Google "paper trading contests" to start you off. Also, many brokerages have their own paper trading platforms.
If you have intentions of becoming more active in trading (as opposed to just buying one or two stocks that you feel very strongly about, and holding for the long term), I would definitely suggest trying your hand a several of these "games".
While you can never really be totally prepared for the psychology and shock of losing real money (and it will happen), it would be nice to get your success percentage relatively high, BEFORE investing/risking your hard-earned dollars; and unless you're in it for the long haul (APPLE possibly comes to mind - just POSSIBLY!), always try to start off with nominal amounts that won't hurt too much, should you lose.
One final point, even though hardly anyone listens (including myself, unfortunately)...DON'T GET COCKY! Many folks get off to a good start, and feel that they are unbeatable. Guess what? You're not! Occasionally take profit, don't put all your eggs in one basket (unless starting out with a REAL small amount of cash, perhaps), and follow some kind of rationale plan.
Best of luck!
FACE
Answers
4087 points
EthanR answered 2 years ago …
First you need to determine if you want to have an account with a full brokerage service or a discount brokerage service, in which you place the orders yourself. With a full brokerage service, you will be given a stock broker who you will call when you wish to buy or sell a stock. The advantage is the extra service you will receive, and the disadvantage is that you will pay a lot more money on trade commissions than you will with a discount brokerage account. The following link is a good one for more information on types of accounts:
http://stocks.about.com/od/findingabroker/a/Openaccount.htm
The link below has a good list of the different on line discount brokerages, with information about each, as well as contact information to open an account.
http://www.fool.com/brokers/index.aspx
And this link ranks the full service brokerages:
http://www.smartmoney.com/brokers/index.cfm?story=2004-full-table
Many people start with a full service brokerage until they learn more about investing in stocks, then switch to a discount on line brokerage to save on the commissions. Just make sure that you do your own research, and if the broker recommends a stock, check it out before you agree to buy it. Some brokers are just interested in having clients trade frequently for the commissions, so be careful. Best of luck!
128 points
dnce answered 2 years ago …
This is a fairly simple process. Assuming you are going with an on-line discount brokerage (and most offer full service, as well), you would visit their website to get their full explanation of the application process. Visit several to get a feel for what services they offer appropriate for you. Once you've decided which service is for you, you would fill out their application, basically a credit application, but required by the taxman and send them an initial deposit. Your account should be open in a day or so.
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4107 points
MNSL answered 2 years ago …
I suggest to register with a stock broker who can give good research reports in addition to their normal brokering services. It is better if they can give you online trading facility as well. Brokerage commission differ from one broker to another. Try to be cost effective. You can do little bit research as well before you selecting your broker. Once you register with your Broker and fill your application form they will open an account for you. After that you can buy and sell shares.
Sometimes back I started my account with a discounted broker in a small developed country. First day it self they they gave me valuable research reports on companies. Therefore, I was able to compare companies at that time and it really helped me to select best companies to invest. Recently I selected a Bank with lowest brokerage fees to start my retirement scheme. In the meantime we also must be able to understand our investment. It is always better to invest in what you know and once you build up investment style stick to it. Don’t follow herds. In addition if you keep correct investment at least for 05 years you can take above average returns.
Once you register with your broker, you can go for different type of stocks. Such as fast growers, cyclicals, turnarounds etc. Particularly keep eye on financial stocks including merchant and leasing companies, commodity and food related companies, health and technology companies (if you know technology). Currently most stocks are over priced all over the world except some frontier markets, some stocks and some commodity related stocks. So you have to be very careful in selecting stocks.
Please make sure that you are not overpaying for your stock. Future earnings are very important. Once you buy stocks you have to monitor and do research very often. If you see fundamentals are going against your stock for a longer period then it is better to sell your stock and buy with good one. If earning drop is temporary don’t worry too much and if it is outstanding stock you can accumulate more if you see there is huge potential in the future. Good Luck.
170 points
theFACE answered 2 years ago …
BTW,
My apologies to all re: "so I'll be general and brief"...
D'OH!
;>)
