Tuesday, March 23, 2010
How to Buy Stocks On eTrade
"How to Buy Stocks On eTrade"
We'll talk about a few things in this article to get you trading on eTrade. Did you know you can also buy stock in eTrade. Yep, eTrade is a Pink Sheet listed company. Once we get you started with an account and show you how to trade, you can get some of those eTrade stocks!
In 1982, William A. Porter and Bernard A. Newcomb founded TradePlus in Palo Alto, California. In 1991, Porter founded a new company, E-Trade Securities, Inc. with several hundred thousand dollars of startup capital from TradePlus. E-Trade offered its trading services via America Online and Compuserve. In 1994, its revenues neared $11 million (up from $850,000 in 1992). It later reorganized and emerged under the name E-Trade Group, with E-Trade Securities as its principal subsidiary.
How to buy stocks on eTrade
The first thing that needs to be done in order to trade stocks online with eTrade is to open an eTrade account. To do so visit either the link at the bottom of this page or there should be more info to the right and left of this page on doing so.
To open an eTrade account you'll need to decide how you will trade. Day trade, swing trade, long term, so on and so forth. The reason you have to know this information is because it directly affects your first and minimum deposit requirements. A "day trade account" will require a minimum deposit of $25,000.00 to open and trade freely, where as a normal account you only need to have an initial investment of $1000.00. Make sure you read all the required information before you sign. More than 4 trades a day and you'll be classified a day trader and will have to be put on the "known day trader list" you then have to pony up the $25k to continue trading.
A margin account allows you to trade without "settling" this means if you sell a stock you can use the proceeds right away to buy another. Regular accounts ($1000.00 deposit) are subject to at least a 3 day clearing period. Margin account deposits are larger and require a minimum of $2500.00 instead of $1000.00. If you account goes below the minimum they will liquidate your stock to cover a margin call. Read up on that!
Read a few books on how to trade stock. Try "Stock trading for dummies"
Step 2 How to buy stocks on eTrade
Now that you've opened you account it's time to make some trades. Deciding how and what you'll trade is up to you. How to trade stocks online with eTrade is what we'll cover. Remember this is your hard earned money. Study! Do you DD and make sure you know what your buying and why. NEVER get emotional about a stock!
Buying a stock online with eTrade is
very simply. Find the stock you'd like to buy. We'll use eTrade's stock symbol ETFC. Look to the "quote" bar enter your symbol ETFC. This will bring up charts and more information on the company you have chosen. In this case it's eTrade. You'll see a button that says "Tread Now" Click it. This will take you to your buying and selling screen. Your order screen is where you can choose to buy, sell, how many, in what way, where and everything in-between. This is your trading panel. We'll cover how to buy in the next step.
Step 3 How to buy stocks on etrad
The next step after you've decided which stock to purchase, and have done you DD, found is to actually make your purchase on the market.
Lets talk about how to do that and the different ways that you can buy stocks with your online eTrad account.
Market Buy: NEVER use this! This is a sucker bet, always use the "limit buy" A limit buy (and limit sells) prevent you from losing money due to "slippage" read up a little more on slippage. Basically it's the difference between what shows and where your order is placed. Market makers actually place orders on the floor for you. No matter how you trade online or not, a broker and a floor man place the trades for you. By using a limit order you can protect yourself from the slippage and from not so honest floor men and brokers taking a little of your profit. ALWAYS use limit buys and sells.
Let's say you want ETFC and it's at $1.00 a share. Put your buy in for no more than what you'll pay So. Buy, Limit Price of $1.01 10,000 shares and click order. You're order will be placed and your buy will be at exactly $1.01.
With a limit buy you can choose the length at either the day or until its filled this is the "good till canceled" order. Now that you understand how to place a limit buy online with eTrade, let's learn how to sell with a limit sell order.
Step 4 How to buy stocks on etrade
Ok you have a few stocks in your eTrade account and it's time to sell. Again, stay away from "market" sell to avoid slippage and protect your profits. A limit sell is essentially the same as a limit buy. Your putting a "limit" on what you will sell for. Let's take the same eTrade stock. ETFC at $1.00 you have 10,000 shares and want to sell. Just like with a limit buy you would enter your selling price. So. Sell, limit price of $1.02 10,000 shares and click sell. You can choose to have your "good till canceled" on for the rest of the day or until you cancel it manually.
Remember, always use "limit" for your buys and sells. Never buy any stock without doing your DD!