Trading your own stocks and index funds (ETF’s) is not overly complicated, but you are using real money so it is important to be careful. This page will teach you all the steps from creating an account to finalizing a trade. The steps you will have to complete are:
- Choose a brokerage and make an account
- Find the correct ticker/symbol
- Place an order
- Confirm the order
Choosing a brokerage
The brokerage is essentially the app you will be using to complete your trades. There are lots of options; Questrade, tangerine and robinhood are some of the popular ones. I use Scotiabank iTrade, mostly for the convenience since that is where I do my banking. I have had no issues and believe it is a good option. Other banks also have their own trading apps, so if you bank elsewhere there’s a chance they could have an app for you as well. The only brokerage I have heard issues with is robinhood and the online reviews are mixed. I would stay away from it in the mean time, but it is up to you which brokerage you choose. Making an account is usually pretty straight forward after you have chosen the brokerage you would like to use.
Finding the correct ticker/symbol
A stock’s ticker is the stock or ETF’s 3-5 letter identifier. Apple’s ticker is AAPL, Microsofts ticker is MSFT. Before you find the ticker of the stock/ETF you want to buy, you have to choose one. You should do your own research before picking what you want to buy. Below I’ve attached a page from a quick google search of the most popular ETF’s, a good place to start your research.
On that list you will see IVV. I buy the Canadian-hedged version from iShares with the ticker XSP. I’ll use that as an example here. After you have made an account, there should be something similar to a “make a trade button”, this should take you to a search bar where you will input the ticker of the stock or ETF you wish to purchase. In this example, XSP. Here you should find extra information on the stock/ETF, such as the bid and asking price. The bid is the price that traders currently want to buy at, the ask is what the traders currently want to sell at. The gap between bid and ask price widens in volatile and illiquid environments.
Placing an order
After you have found the correct ticker (and always double check, companies have benefited from the mass buying of the incorrect stock, ZOOM being one example), you are ready to place an order. Your order type is to buy or sell, we are going to be buying. Price type can be set to either market or limit. If you select market, you will buy at the best currently available price. If you select limit, you will be able to select the maximum price you are willing to buy the stock/ETF for (or the minimum you are willing to sell for if you are selling). Limit is the safer way to avoid surprises when buying. You can set a limit $0.01 above the listed asking price, this way you won’t end up with a much higher number on check-out as is possible if you used market. However, you have to watch when you are using limit, because if the price goes above your limit and doesn’t come back down, you will never end up buying the stock/ETF. The Canadian and US stock markets are open from 9:30AM to 4:00PM EST, it is best to do your trading within market operating hours. For term, I usually select day, and market you would select which market the stock belongs to. XSP belongs to the canadian market, so I selected CDN for Canadian. Quantity has to be in full shares, so if you want to invest $5000, it is unlikely you will get to invest that exact amount. XSP currently has an ask of $33.90, so I will divide the amount I want to invest by that number. $5,000 / $33.90 = 147.5. I cannot buy a half share, so I have to round down. This means I can buy 147 shares of XSP.
Verify the order went through
Your brokerage app should have a transaction history page that shows your previous trades. You should see your purchase here, if you don’t there is a good chance it has not been completed. This is important, because as I mentioned above when using limits, it’s possible you set your limit to low (or to high when selling) and the transaction never went through.
Trading online is as simple as that, but always ensure you double check everything. You are dealing with real money and it would be a shame to be one of the many people who lost money buying ZOOM because they thought that was the ticker for the company zoom when it was actually ZM.