- the basics
- the share
- trading shares
- Process to buy shares
- Why buy shares?
- How old to buy shares?
- Custodial account
- tax rules on shares
- styles of trading
- buying (going long)
- Shorting (going short)
- Stop losses
- How to choose a share
- Fundamental analysis
- Technical analysis
- Stock portfolio
- Trading courses
- Stock trading practice accounts
- brokerage account
- What is trading software
- Share newsletters
- the stock market
- Trading guide
- free stuff!
A step by step guide to buying shares
Welcome to your step by step guide to buying shares. Here you will find 10 steps you need to take to become a trader, the reasons why you need to take them and direction to facilities that enable you complete each step.
We recommend you bookmark this guide as you’ll want to return to it!
Before beginning your step by step guide to becoming a trader it is worth noting that becoming a trader often takes time depending a variety of factors such as how quickly you learn trading strategies to how long your brokerage account takes to set up etc. Patience is required but the rewards of making consistent profits far outweigh the effort required to learn how to trade! If you’re not 100% sure about becoming a stock market trader then perhaps you should try the idea out with a free practice trading account first. Plus500 offers a really great practice account to get you started.
1. Know the basics
So you’re thinking about trading shares in order to make some big bucks…
First of all you need to obtain a basic knowledge of shares and the stock market. It goes without saying that without knowing the aspects of a stock or the concept of how the stock market works its impossible to know what you’re doing. You can gain all the basic knowledge of the stock market in the basics section of the website.
These are the key concepts that need to be learnt before moving onto learning to trade;
- Learn the aspects a share has e.g. dividends, bid/ask price, its chart etc.
- Know what information (software/websites) is required to buy shares.
- Learn how the stock market works
- Know of the risk involved with trading shares
Its important to have this knowledge before paying money for a trading course (step 4) to enable you to fully understand the concepts being taught. By not knowing any basic stock market information, parts of courses could easily fly by you, meaning that you will struggle to understand the information that you will have paid for!
2. Open a practice account
Opening a practice account links with step 1 as it will help you grasp the concept of buying and selling shares in the stock market. Plus500 makes it really easy to get to grips with buying and selling shares via CFD’s.
The best thing about practice trading is that you can experiment with strategies and not lose any money! This is because when trading you are using ‘pretend’ cash balances which you can edit to represent how much cash you would actually want to trade with. Practice accounts also have free charting tools which will enable you to get used to technical analysis.
However as practice trading has many perks, I do have a word of warning, whatever you do don’t think that successful practice trading, without proper education, qualifies you to trade on the stock market. People can often get lucky by e.g. buying in a bull market, making money, and thinking this makes them a competent trader. Step 2 is just to help you grasp the concept of trading shares and hopefully enable you to realise how much money can be made from trading on the stock market.
View a list of recommended practice accounts.
3. Subscribe to a news site
By subscribing to a news site you will receive news before, after and sometimes (depending on the website) during a market day. Taking in news from the city will help you understand what economic factors influence the direction of the stock market. The morning report especially is helpful in predicting whether the market will start up or down, which consequently will enable you to make better (more informed) trading decisions.
News sites often come hand in hand with practice account, where you will find one you will find the other. If you register to one of our recommended practice accounts then you will have the option to receive commentary of the stock market via e-mail.
4. Educate yourself
Step 4 is the most important stage before trading shares.
We would strongly recommend paying for a course when learning how to trade for several reasons listed here. In relation to progressing through our step by step guide, paying for a course shows a huge commitment to becoming a trader, a commitment you need to take if you’re serious about making substantial money from the stock market.
View our section on trading courses.
View our recommended courses.
5. Open a brokerage account
You should open a brokerage account soon after gaining a solid education of the stock market as this will help keep your momentum going towards becoming a trader. It is important to pick the right brokerage account for your style of trading. For example some accounts charge inactivity fees which would be bad for position traders (traders who trade rarely) whilst some have expensive trade fees which would represent a bad deal for day traders (traders who make several trades a day).
View our section on brokerage accounts.
View my list of recommended brokerage accounts.
6. Obtain charting software
Charting software is essential when making trading decisions. Charting software provides accurate fundamental and extensive technical analysis which greatly improves the chances of making successful trading decisions.
Charting software will require a monthly payment which can put people off using it and using free charting websites instead. However, having solid and extensive information from charting software, before trading, will easily improve your stock picking decisions and easily justify paying for charting software.
View our section on charting software.
View our recommended charting software.
7. Subscribe to a quality newsletter
Step 7 is not an essential step…some people like to make trading decisions by themselves however some people find newsletters with tips in give them more confidence to place trades.
However as well as providing tips, newsletters also provide useful insights into companies and the stock market.
View our recommended newsletters.
8. Start practice trading
Unlike step 2, where practice trading is recommenced to help grasp concepts, this practice trading step is used to simulate the trading strategies you have learned, and will use when trading for real. It is essential that you become successful at practice trading over a period of time (8 weeks suggested) before trading for real. This is to make sure your strategies work and that your initial rookie mistakes (it happens to all of us!) do not dent your real cash balance!
Make sure you consistently make profits before using your own hard earned money to trade with.
View our section on practice accounts.
View our recommended practice accounts.
9. Start real trading
If the 8 steps have been followed and all has gone well then it is time to start real trading!
10. Further your knowledge
It is always important to continue to further your knowledge of the stock market and to get different perspectives. Outside of the basic info on this site, there are a number of good online classes you can take at Udemy.
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Stock market basics
Stock charts explained
Stock dividends explained
Stock Split Explained
Why do shares move up and down?
How do I read a stock quote?
Understanding company financial statements
Rights issue of shares
The process of buying shares
Why buy shares
Age limit for trading shares
Tax rules on shares
Styles of trading
Buying (going long)
Shorting stock (going short)
Stop losses explained
Stock market explained
What market to buy shares
Factors that affect the stock market
When does the stock market open?
Stock market trading guide
Step by step guide to trading shares
5 golden rules when trading shares
The risk:reward ratio
Stock market games
Stock market 60
Stock market suicide
Advanced stock market trading
IPO (Initial Public Offering)
Exchange traded funds (ETF's)
Very good tips. I usually end up makings losses in trading. It is certainly essential to follow your steps and make money. Happy hunting on shares trading.
Hey i want to start share trading and learn all things…is this good to trade?? pls give me some tips to start..
Very good article, I don’t agree with step 7 because most newsletters tend to promote pump and dump penny stocks
I understand where you are coming from, it is important to pick a trustworthy newsletter. There are a lot of stock market related companies to avoid out there!
It is possible to deal shares from home. I have been doing it for a few years now and have built up a nice little pot. If you are thinking of giving it a go you would do well to follow the 8 steps listed above. It does take time to learn the market.