I bought my first stock in late 2013 (2 years after I finished college). Up until that point, all of my investment money was going into mutual funds. My bank and broker (then, USAA) would stop by Ohio State each year and impress upon students the importance of investing early and how easy it was to open an account with them. I jumped right on the band wagon. It’s OK if you haven’t (yet).

To invest in any of their mutual funds, all you needed was a checking account and I had one of those. At the time, I had no idea what a brokerage or margin account were and I didn’t know how to read a stock chart. All I knew is that I was saving money and my accounts were getting larger.

So in 2013, I was sitting around the office with a buddy and we were both waiting to go fly around San Diego. We got on the subject of money when he mentioned how he had just made a good amount of money in the Google stock ($GOOG) split and was looking to move the money into another stock. Having played the game Stock Ticker growing up, I knew what a split was, but I didn’t know how he was taking advantage of it. He informed me that to buy an individual stock (and as I would later learn, anything other than a USAA mutual fund) I needed something called a brokerage account. After looking through their website, I saw that USAA offered such a thing and I was ecstatic that I could buy and sell stocks just like the pros!

So, after some trial and error, I figured out how to move money into the account and reached my second hurdle (the first being the opening of the account), figuring out the lingo. I remember going through all of the different options and looking them up on Investopedia. I spent hours learning what limit orders, stops, trailing stops, volume, and market orders are.

The day after our initial conversation, I was ready to join my buddy in the fast paced world of stock trading. I asked him what the new hotness was. He said he was looking into T-Mobile ($TMUS). I scoffed and made some comment comparing T-Mobile as the Zune of telephone networks. He told me that a buyout by AT&T ($T) had failed and now was the perfect time to buy. Now, after years of experience, let me give you some advice: if people are talking about a stock as being a good deal and a sure thing or how it’s the bee’s knees, you are probably too late to the party. Warren Buffet once said:

“Be fearful when others are greedy and greedy when others are fearful.”

When everyone knows about it, a stocks huge moves are probably already over. Buuuuut at the time I didn’t know better; so I did a little research myself. He was right, T-Mobile had all the cards from a failed AT&T deal and with a new CEO put in place by Deutsch Telecom, they were making moves. They released the un-carrier plan and kept their unlimited plans when AT&T and Verizon were cancelling them.

So that day on 4 November 2013 I made a market order (something I don’t recommend too often) and bought 150 shares of $TMUS at $27.90 per share. To date, T-Mobile has been my most prolific stock purchase (although Tesla is following in a close second). At this moment I still haven’t sold the stock so all of my gains are unrealized (meaning it’s not money I have in my wallet, but rather money I could have if I sold it at the current bid price), but maybe someday I’ll get rid of it.

I’m sure by now you’re wondering what you can do to jump into the high risk (yes, there are losses to be had as well) world of stock trading. If you’re new to the market as I’m guessing you are based exclusively on the title of the article, then you’ll have to overcome the same obstacles that I did.

1. Get yourself a Broker. I use USAA and TD Ameritrade. Dan uses Vanguard and USAA. There is no right answer. Take a look at their sites as well as any others you find and see if it fits your needs. I’d look for investment and IRA possibilities as well as commission rates and sign up benefits. There are plenty of options, Scottrade, E*Trade, etc., are all different brokers. Some of the basic things to consider are costs of each trade, any benefits you get for high volumes of trades if you think you’re going to be highly active, and what information you think is necessary.
2. Open up a Brokerage Account. You don’t need anything fancy. If the broker asks you questions about your market experience, don’t be afraid to tell the truth and say you have little. They may limit your account somewhat, but ultimately it will help protect your money from you. Maybe down the road you want a margin account (one that lets you borrow money from the broker) and that’s fine, but you probably don’t need one now. If you’re new to the market there is no reason to risk so much so early.
3. Move money into the Brokerage Account. Most brokers will let you electronically transfer money from a checking account to your brokerage account even if it’s from a different institution. Remember that unless you invest all the money you transfer over, it will just be sitting idly in the brokerage account and not working for you. Don’t send more money than you plan to invest. Also note, that some may have a verification process where they deposit or withdraw only a couple cents and ask you how much was taken out of your checking account to verify one last time you’re really the owner.
4. Decide on a stock that you want to buy. This could be a company that you like (my brother asked our parents when we were very young to buy Krispy Kreme stock because he loved the doughnuts) or one that you think will really go up in the future. Alternatively, you could decide that you want to buy shares of a mutual fund. For example, for me to invest in Vanguard’s Energy Fund ($VGENX) through USAA, I needed a brokerage account to do it and I paid a commission to buy the shares since it was run by a different institution.
5. Figure out how much you’re willing to put into the stock. Depending on your broker (I’m looking at you USAA…), you won’t be able to say ‘put $3,000 into this stock’. Instead, you’ll have to tell the broker how many shares you want. Decide on a dollar amount to invest then figure out what that is in number of shares by doing some division with the price. You may have to do some rounding one way or another.
6. Place your order. Since this may be your first purchase, you’re probably not worried about selling right away and would rather allow the stock to play out for a while. If that’s the case, a market order is just fine (know that you may pay a little more or less per share than you expected). This just means you’ll be buying the stock at the price that the market is dictating at the time of purchase. If you really want to buy the stock at a certain amount, you’ll want a limit order. The limit means that the purchase will be executed whenever the price drops below your specified value. There is usually an expiration on limit orders like Day or Good ‘Til Cancelled (GTC). Select either of these depending on what you want.
7. Congratulate yourself on buying your first stock! That is of course, unless you did a limit order with a price limit that hasn’t been hit. If you chose market, you just bought shares of a company!
8. OPTIONAL: Set a Stop. What’s a stop? A stop is the opposite of a limit. A limit means execute the trade when the price is a certain number or better (lower for buys and higher for sales). A stop executes when the trade price is worse than your specified amount (higher for buys and lower for sales). If you buy a stock at $30, and it starts falling, you may only be willing to take a loss down to $25. In this case you would place a stop order in at $25 and as soon as the stock hits that price your broker will try to sell your shares (even if it immediately goes back up). I wish someone had told me the value of stops a few years ago. After some hard lessons (companies going bankrupt left and right) I’ve started putting stops on all of my stock purchases.

So there you have it. A few simple steps that can be completed in a few hours will get you your own shiny stock certificates! Keep doing your own research and ASK QUESTIONS. There are plenty of people online and probably in your circle of friends who have answers to your questions. IT’S YOUR MONEY. Make smart and educated decisions. If someone is telling you that such and such is a good stock to buy, let them buy it and see how it plays out ($GTBC the last few weeks of June 2017). Don’t buy a stock just because your friends are.

If you are interested in finding out what makes a stock price change, check it out here!

If you have any of your own advice or questions please leave them in the comments below. We love feedback and new ideas! Good luck in the market!