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how to invest in stock market for beginners | How to Buy Stocks Online (2022)

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In this guide, we will explain how to buy shares on the stock market without fixed commissions and in total safety, through the best online brokers on the market.

Many investors turn to the stock market every day to buy and sell the listed shares of their favorite companies. The main advantage is offered by the economic and helpful conditions that exist today, thanks to the online brokers that allow you to make equity investments safely and with accessible capital.

Consequently, the activity of investing in shares online has become increasingly popular and in this guide, we will offer all the useful ideas to buy shares on the stock market with the best market conditions.

What does it mean to buy shares?

The first aspect to consider is to clarify what it means to buy shares, by defining the main aspects that regulate this sector.

how to invest in stock market for beginners | How to Buy Stocks Online (2022)


What are stocks?

We can define shares as a financial security representing a share of the ownership of a company listed on the stock exchange. Each of these companies will divide its total capital into many small quotas (the shares) that will make up the float on the stock exchange. 

Buying shares means becoming “shareholders” of the company, as you become part of the company capital, with all the resulting rights and charges. The shares can be sold or passed on to other investors.

Why does a company decide to go public?

This happens because in this way the company can issue shares to finance its growth, receiving capital from shareholders. The phase that expects the listing is defined as IPO (Initial Public Offer) and has a dual purpose:

  1. Raise funding.
  2. Establish the unit price of the share.
The main advantage of buying shares in a company is undoubtedly the possibility of making a profit if the value of the share increases, thus obtaining a capital gain and participating in the company's growth.

What are the types of shares?

Not all shares are the same, there is a big difference depending on the nature of the company (listed or not) and in the intrinsic type of the share contract.

The main types of shares are 3, here they are:

  • Ordinary shares: guarantee the shareholder the right to dividends, the reimbursement of capital in the event of liquidation of the company, and the right to vote in both ordinary and extraordinary shareholders' meetings.
  • Savings shares: particular types that give shareholders particular patrimonial privileges, especially in terms of profits and dividends. However, they do provide for the right to vote in assemblies.
  • Preferred shares: give the shareholder a priority in the distribution of profits or in the company's liquidation. The right to vote is granted only in extraordinary shareholders' meetings.

The most common are ordinary shares, due to the fact that they can be traded online on specialized brokers. It takes a small amount of capital to buy even a fraction of the share, since there are no minimum lot of shares to buy. Here a capital of 100 euros can be enough to invest in this market and become shareholders of our favorite company.


Who buys and sells shares?

Here are the entities authorized to trade shares on the financial market:

  • Retail investor: any citizen with at least 18 years of age and a bank account in their own name will be able to buy shares and invest in the stock market without particular limitations.
  • Broker: it is a professional platform that acts as an intermediary between the investor and the financial market. This procedure is necessary because it is not possible to buy shares without intermediaries. We always need a professional figure able to put our investment choices on the market.
  • Investment company: it has all the requisites for trading shares on the stock exchange. They can do it on behalf of third parties or for purely speculative purposes.
  • Investment banks: large investment banks are also equipped with a Trading Floor where shares are bought every day for hedging or speculative purposes.

How to buy shares?

To find out how to buy shares on the stock market, we must follow some simple steps, necessary to start the investment:

  1. Establishing a Budget: How Much Money Does It Take to Buy Stocks? Many brokers offer the opportunity to invest with only €100, a solution for all budgets. Having said this, our capital must also be protected through a series of useful measures: never invest beyond our economic possibilities and use techniques to safeguard capital, such as Money Management and Stop Loss. Stock trading must be a profitable business, but it makes no sense to invest exaggerated sums or perhaps the savings to be allocated to our retirement. This is why it is essential to understand that money invested in stocks must be considered as risk capital.
  2. Open an investment account: now that everything is ready, it will be necessary to open a secure and certified trading account to invest in shares with great professionalism. Let's clarify an important aspect: the registration phase is regulated at the European level, and all brokers must comply with Standard procedures in order to guarantee maximum security for investors. In this regard, we suggest having two documents on hand: an identity card and a proof of residence. Subsequently, when making the deposit, it will be possible to choose between the following options: Credit/debit card, PayPal, or bank transfer. Some platforms to buy share also offer digital methods such as Skrill or E-payments.
  3. Choosing the shares to buy: here is the crucial point for investing in shares successfully: choosing the most profitable stocks to bet on. A few examples? For several months there have been really interesting markets to keep under observation: Pharmaceutical, Technological, and Robotics. Within each macro-category, it will be easier to choose the shares in which to invest. For a complete analysis, here are the 3 main parameters to establish the value of the action with good accuracy: P / E: (Price / Earning), EPS: (Earning Per Share), ROE: (Return On Equity). These are fundamental indicators to find out if the price of a share is overvalued or if it hides excellent upside potential. Other investors focus exclusively on dividend stocks, as their goal is to obtain an annual return guaranteed by the ex-dividend, annual or semi-annual.

Appreciation for these three simple steps, we will be able to buy shares from professional brokers and with very limited initial capital.

Stocks to buy

Choosing which shares to buy is a very delicate phase, as this aspect will determine the success (or not!) Of our investment. To determine which are the best stocks to buy, we suggest you follow the following recommendations:

  • P / E: since this is an indicator with an absolute value and not a percentage, we suggest considering stocks with a Price Earning not exceeding 50.
  • Diversification: never bet all your capital on a single share, we must always balance our portfolio with a good number of companies that differ by geographical area and sector.
  • Capitalization: we suggest giving preference to solid and well-capitalized companies, as they will be better able to withstand the bearish phases of the market.

Let's go into more detail with some useful advice on the hottest stocks of the moment. Obviously, we do not want to provide investment indications for our readers, as ours is a purely informative work.

What stocks to buy right now?

Given the global geopolitical situation, the most popular stocks are the following :

  • Saipem: oil stocks could have a significant rise, so buying Saipem shares could prove to be a good move.
  • Tesla: the acceleration towards renewables pushes green stocks like Elon Musk's company more and more, even if buying Tesla shares has been a very popular activity for several years.
  • Pfizer: why buy Pfizer shares? The pandemic is still ongoing and sales of the vaccine are not stopping, which is a good reason to put PFE in our portfolio.

What stocks to buy and sell on the day?

Much appreciated by Day Traders, here are two excellent titles suitable for Intraday:

  • GameStop: a stock that rose to prominence thanks to the Reddit community, it offers numerous ideas for investing in the short term with scalping operations.
  • Coinbase: another very volatile stock, perfect to be traded within 24 hours. Buying Coinbase shares allows you to take advantage of the volatility that this recently listed company offers.

How to choose a stock?

A very common technique is to select the best indicators to determine which shares are worth buying, with the right investment timing.

What are the rules to follow when choosing a stock?

We have identified 6:

  1. Adequate Company Size: The company in question must be solid and of good size to avoid investing in under-capitalized Penny Stocks. A good size will also help the stock to be less volatile in the market, which is a big advantage for our portfolio.
  2. Good financial solidity: all the main economic indicators of a company such as ROE, ROI or ROS must be positive. The capital situation must also be solid and in line with the parameters set by the supervisory authorities. In times of pandemics, fluctuations are the order of the day: solid finances will help the company to remain stable to navigate even in troubled waters.
  3. Stable earnings: the percentage of revenue deriving from the core business is also an optimal indicator for determining which shares to buy. Companies that have stable revenues from the sales of their products or services will have a competitive advantage over seasonal companies or those linked to some specific factors.
  4. Constant dividends: with the exception of Tech companies, known for not issuing coupons or coupons, a very useful parameter for choosing which share to buy is given precisely by dividends. Some investors just manage to create an investment portfolio with the best dividend stocks and obtain a stable return throughout the year.
  5. Earnings Growth: Looking at the company balance sheet, we will notice if earnings are growing or not. This aspect indicates a company in great health and with still high profit margins. A useful indicator is the Cash Flow: if we find it increasing it will mean that we are facing a profitable company, ready to fly even on the stock markets.
  6. Adequate P / E ratio: of all equity indicators, Price Earning is certainly the most used. There are many analysts who rely on this aspect to define their investment choices. The P / E is expressed in absolute values (therefore, not percentages) and the lower it is, the greater the growth potential of the share. Conversely, high PE values (above 100) are likely to indicate a company that is already overvalued in the market.

How much does it cost to buy and sell shares?

Between commissions to the Broker, taxes and various taxes we must take stock of the expenses to be incurred. Much will depend on the broker chosen and the most convenient are the online brokers specialized in shares.

How much does it cost to buy and sell stocks?

When purchasing, we must consider the following costs related to commissions:

  • Executed: this is a commission that we must pay to the broker for having entered the market order. This cost is only applied by ECN brokers.
  • Spread: the difference between the purchase and sale price (Bid / Ask), consists in the commission required by each broker to manage the operation.
  • Overnight: Almost all brokers charge a commission on investment deals held overnight. It follows that by closing our open trades by midnight we will avoid swaps, rollovers and overnight.
Since with online brokers all operations take place within the platform, there will be no cost to sell the shares in our possession. Just click on " sell " to liquidate the stock.

To all this we must consider the capital necessary to start the investment: $ 50 is enough to trade shares, however this figure cannot be considered a cost. In fact, it is the money that we will deposit into our account and it will always remain in our possession since we can opt for the withdrawal at any time.

What mistakes to avoid when buying stocks?

Investing in stock market shares hides some pitfalls that must be recognized and avoided in order to keep our trading account active.

What are the most common mistakes when it comes to buying stocks? Here are the most frequent:

  • Do not diversify the securities portfolio: we always suggest trading at least 5/6 different shares by business sector, nationality and index.
  • Forget Money Management: never bet more than 10% of our capital on a single share. The MM serves precisely to preserve our account over time, optimizing it to the fullest.
  • Do not enter the Stop Loss: in this case we will face indefinite losses with the risk of burning all our capital in a short time. The SL must always be loaded before opening an operation.
  • Wrong Timing: in essence, entering the market at the wrong time. For example, often when a stock goes up we think it will do so for a long time to come, with the result of opening a BUY when it is too late.

Following these tips is the first step to successful stock buying.

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