How to place a trade in the stock market
Once you have decided to buy a share, you go to your online trading account, select the stock you want to purchase, then you decide:
Purchase by: quantity or value
You can either choose a quantity of shares ie 100 or 1,000 or purchase by amount, ie $1,000 or $2,500.
It is a personal preference whether you trade shares to the nearest round dollar or by the number of shares but most fund managers would own a round number of shares rather than a round dollar amount at purchase.
Price: Limit or market
This is what price you are prepared to pay per share. You can just select ‘at market’ and the trade will go through as soon as it can at the market price.
If you choose a limit you put in the price you are prepared to pay for the shares.Your share trading screen will have a depth screen to see the number of buyers, the volume and price and the sellers volume and price. It will give you a sense of where the market is heading.
Also look at the price chart to see how the price has moved over the past 12 months, 6 mths, 5 days, and that day. The charts show you the trend over time and intra day as well.
Expiry: good till expiry/ good for day
Are you happy for this trade to only go through today? Or are you happy with your trade at that price until it is executed? If you put in a price and the market moves on from it, your trade may not go through on the day you put it through.
Fluctuation in share prices
What can be a surprise for a new investor is the range that each stock trades both within a day and over a period of time. For example the Commonwealth Bank (CBA) one of the largest on the market has traded from around $60 to $95 a share in the last 12-months. It obviously also takes more capital to get a holding of 100 shares and the share price can and does move around.