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eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
There are a lot of places for investors to buy stock online. In fact, there are probably too many options — which means new traders can be confused about where to start. Thankfully, our experts at Traders Union have done a lot of in-depth research to find the best online stock brokers known for low fees, reliable regulations, and favorable trading conditions for new traders. Armed with this knowledge, you'll know where to buy stocks online.
Step 1. Choose Your Online Stock Broker
An online stock broker is an intermediary between the buyer and the seller of a financial instrument. These days it's possible to buy and sell stocks entirely online. To do this, all you need to do is register with an online stockbroker, fund your account, and start buying shares.
What to Look for When Choosing Your Broker
There are several factors to consider when you're choosing between online stock brokers.
Some of the questions to ask yourself are:
Is the broker subject to stock market regulations?
Picking a suitable stock market broker involves a lot more than getting along well with them. One of the biggest factors you should consider is whether they are subject to stock market regulations.
Firstly, the broker (or the brokerage firm they are associated with) should be a registered investment advisor (RIA). This ensures that they are on record with and also under the regulation of the SEC. Additionally, the broker should be FINRA registered. FINRA, which stands for Financial Industry Regulatory Authority, is the trade organization that oversees the financial industry on behalf of the United States government.
To buy and sell securities, each broker must pass specific qualifying exams and be licensed by state securities regulators. Without this, they can’t do business with you or on your behalf. They need to pass the Securities Industry Essentials and the Series 7 General Industry Essentials Exam.
Many brokers also choose to take the Series 6 Investment Company and Variable Contracts Products Representative Exam. These tests allow them to sell mutual funds, UITs, and so forth.
How Large are the Brokers Fees and Commissions?
There is not a huge difference between many online brokers’ fees. When you are considering where to buy stocks online, it’s worth remembering that many brokers charge around $4.95 per to $6.95 per trade. The vast majority of investors make approximately 10 ETF or stock traders per year, so this difference is negligible. However, it should be noted that other brokers charge flat fees on trades. So it’s important to figure out which model your broker uses and pick the one that suits your investment style best.
Additionally, many brokers offer zero commission for trading stocks, ETFs, and options. In fact, since Webull brought in zero-commission, many brokers have followed suit.
Zero-commission is great if you're trading with relatively low volumes, such as buying stocks for under $500 per trade. In this scenario, you won’t face the usual minimum fees a broker charges. Also, it’s worth noting that the reason many brokers offer zero fees is that they are selling the order flow.
What Trading Assets Does The Broker List
Another factor that you should consider when finding a suitable broker is what trading assets they list. Again, this is mainly dependent on what markets you are interested in or know the most about.
Some of the different assets that a broker might list are:
Stock Markets
Stock markets are one of the more popular markets for investors. Stocks involve buying and trading shares in a company. In this market, you’ll buy and sell shares from companies like Apple, Google, Shell, etc., as well as any other company listed on indices like the Nasdaq, the Dow Jones, FTSE 100, and the S&P 500.
Futures Markets
Futures markets are another popular financial instrument. A futures contract is basically an agreement between a buyer and a seller to perform a trade at a date and price in the future.
For investors, this means you are trying to profit from price fluctuations between when they buy or sell contract is made and when your position is closed.
Frequently, futures contracts are made for commodities, like precious metals like aluminum or steel, or foods, oil, and so on.
Options Markets
Options markets are straightforward financial derivatives. These contracts give you the right to buy and sell assets within or during a pre-determined date, which is also called the exercise date. If you are the seller, you are legally obliged to meet the terms of the deal. These obligations are typically to buy or sell if the buyer decides to “exercise” the option before the agreed date.
The advantage is that options are cheaper than owning a particular stock.
What Technical Analysis Tools Does the Platform Offer?
Some of the most effective TA tools to look out for are:
Stock Screeners
Stock screeners are great for investors because they allow you to search for stocks based on predefined characteristics. These criteria can be market capitalization, dividend yield, specific industries, or share prices.
Stock Charts
Charting is an essential tool for any trader that uses technical analysis. This type of analysis involves looking at past movements of stocks to predict their future performance.
Stock charts help with this analysis by showing a securities performance over time, which allows traders to see patterns and technical indicators. Users can employ charts to find a stock’s history, understand its volatility, and even compare and benchmark the performance of a stock.
Stock simulators
Stock simulators (also called demo accounts or paper trading accounts) are vital tools for new investors. They allow you to practice fundamental analysis or try out trading strategies without committing capital. It’s essential to try out investing on a stock simulator before getting into the market.
What Should New Traders Look for When Buying Stocks?
If you're a new trader, some of the features you should look for in a broker are:
Once you know where to buy stocks, the next step is to figure out how much you should invest in stocks. Most brokers don't impose minimum deposit limits. These minimums are usually required for margin trading and some prime accounts.
To decide what your minimum deposit should be, you need to think about your income. Most experts suggest that a sound investment strategy is to purchase shares with around 10% to 30% of your income. So, if you make $2000 per month, you should look to invest $200 to $600 over that period.
The main rule to follow is never to invest with money that you can't afford to lose. Investing in small, regular amounts is good because compound interest can really add up over the course of months and years.
Step 3. Consider Your Costs
The next thing you need to consider when dealing with online stock brokers is the costs involved. Of course, the highest expenses will be the purchase of the stocks, but there are other costs involved, depending on the broker.
Small fees on sell orders (1-3 cents per $1k of capital)
Step 4. Decide What Stocks To Buy
If you are new to the stock market world, there is no point in being too conservative with your purchases. Warren Buffett — one of the most successful investors of all time — advises most investors to buy index ETFs. ETFs are exchange-traded funds, i.e., a basket of different stocks bundled together that tracks investment sectors like tech or medical stocks.
The average historical return on US indices is about 9-10% per year. However, if you want more significant returns, you'll need to learn about stock analysis or get involved in active trading. This is the process of buying individual stocks. While it does potentially mean more returns, it also comes with greater risks too.
Let's look at these different options in greater detail.
Stocks
Stocks, also called equities, are shares of ownership that companies issue to raise funding. Shares of a stock give you some portion of voting ownership in a specific company. However, you can also purchase preferred shares where you give up voting rights but get higher priority in payments and, in many cases, higher payments than ordinary shares.
Common stocks let owners vote during shareholder meetings and pay portions of profits to the investor. These payouts are called dividends.
The factors that affect share prices are their finances, the broader economy, which sector they are in, and several other factors.
ETFs
Exchange-trader funds are professionally managed pooled investments. ETF managers buy stocks, bonds, commodities, and other securities and pool them together to make a basket of funds. Fund managers then sell shares of these funds to investors.
When managing the fund, the ETF manager will buy and sell portions of the fund. For example, ETFs can follow a particular stock index like energy, consumer staples of industrials. If it's an energy ETF, it will only buy shares listed on the energy index to put into the fund.
ETF values are affected by the same factors as common stocks. ETFs typically pay a part of the earnings to investors, minus a cut for managing the fund. ETFs focus on several different things like single industries, countries, currencies, bonds, and other things.
Now that you know what your options are, you're ready to choose an online broker. Below, you'll find a step-by-step example of how to buy stocks online from the respected brokerage Webull.
Getting started is relatively easy. All you need is an email address and your social security number.
Webull is an online broker that allows you to buy, sell, and trade different stocks, ETFs, options, and even cryptocurrencies. Webull is a popular online broker because they don't require a minimum deposit or take commissions. Additionally, the platform has many detailed analytic tools, like advanced charts, multiple technical indicators, etc.
Step 1: Create an Account.
Go over to the Webull page and sign up for an account. You can find a blue "Log In" button in the top right-hand corner.
How to Open Account on Webull
From here, you'll see the sign-up page.
Register on Webull
You'll enter your email address or phone number, password, and your verification code.
Most Webull accounts are approved automatically. However, there are some scenarios where extra verification is required. If this happens, it can extend the time to open the account.
Step 2: Make a Deposit.
To buy stocks, you'll need to deposit funds into your account. You can do this via wire transfer or by direct deposit.
Before you make a deposit via Automated Clearing House (ACH), you need to link your Webull account to a US bank account. You can do this through either Instant Account Verification or Micro-deposit Verification.
How to Make Deposit on Webull
When you select this setting you’ll have a choice to deposit, withdraw, or transfer stocks.
Select “Deposit.”
Step 3: Pick Your Trade.
First, you'll need to select the "Watchlist" tab on the main screen.
Go to the "Watchlists" tab on the main screen. It’s on the left side, the upper corner.
From here, pick your stock. This process involves going to the stocks quote page, selecting "Trade," and placing your order.
Step 6. Learn a Lot and Work on an Optimal Strategy
Buying a stock is just the start. To be successful in making investments, you'll need to study the different companies constantly. Additionally, you'll need to learn lots of different trading strategies, and where appropriate, add new shares to your portfolio or sell shares that you feel won't produce good returns.
Here are four investment strategies you new investors should consider.
Value Investing
Value investors are like bargain hunters. They look for stocks that they believe are undervalued. The driving principle of value investing is the belief that the markets are occasionally irrational. If a market is irrational, it means some securities are priced incorrectly.
Value investors hold on to stocks for as long as they can so they can realize their value. Interestingly, Warren Buffet is one of the most famous value investors.
Growth Investing
Growth investors look for stocks with strong stock investment upsides. This strategy looks for the stocks that will perform well in the future. However, they are not mere speculation, they use analytics to predict future growth.
Momentum Investing
Momentum investors use technical analysis. Typically, they look for stocks that are trending upwards. They look for any patterns in the stock prices that help guide their purchases.
Dollar-Cost Averaging
Dollar-cost averaging, also know as DCA, is the strategy of making regular investments in the market over time. With a DCA strategy, you can choose to put, for example, $200 into a market each month. This method avoids the pitfalls involved with market timing. DCA is good for investors who don’t have large sums to invest.
Summary
Buying stocks online has become very easy over the last few years. For anyone wondering where to buy stocks, there are lots of different brokers.
All you need to do is select a trustworthy and reputable broker based on regulations, fees, and what assets they trade. From here, you make an account, deposit some money, and then select the stocks you want.
FAQs
What time does the stock market open?
The trading hours for the US stock market are 9:30 AM to 4:00 PM Eastern time. These hours include the New York Stock Exchange and the Nasdaq Stock Market (Nasdaq). These markets are open on weekdays but not weekends — except for stock market holidays.
How Can I Gain or Lose Money Investing in Shares?
There are two different ways you can make money from stock market investments. The first way is where some of the shares increase in value, meaning that you profit if you sell them. The second way is if stocks pay dividends.
Dividends are something like getting interest on a savings account. When a company makes a profit, they can choose to give some of these back to you in the form of a dividend. These dividends can be paid out regularly or as a one-off.
Of course, shares can also decrease in value, which means no dividends or a loss of money if you sell the shares.
Should I Invest in Shares?
Deciding to invest in shares is a personal choice. Each person will know what level of risk is too much for them. However, if you're going to do it, you need to be sure you can afford to lose the money that you invest. If that's the case, here are a few things you should consider.
What Should You Do if the Stock Market Crashes?
While stock market crashes can be very stressful, they are part and parcel of investing. The best advice for investors is not to lose their nerve. Risk exists in the market, but if you've only invested what you can afford to lose, it shouldn't be a disaster.
During the COVID-19 pandemic, the market dropped by 12%, which was its most severe drop ever. However the market recovered and ascended to record heights.
Andrey Mastykin is an experienced author, editor, and content strategist who has been with Traders Union since 2020. As an editor, he is meticulous about fact-checking and ensuring the accuracy of all information published on the Traders Union platform. Andrey focuses on educating readers about the potential rewards and risks involved in trading financial markets.
He firmly believes that passive investing is a more suitable strategy for most individuals. Andrey's conservative approach and focus on risk management resonate with many readers, making him a trusted source of financial information.
Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.
The topics he covers include trading signals, cryptocurrencies, Forex brokers, stock brokers, expert advisors, binary options. He has also worked on the ratings of brokers and many other materials.
Dr. BJ Johnson’s motto: It always seems impossible until it’s done. You can do it.
