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Buying Shares

19 minutes
Cristian Cochintu
Cristian Cochintu
30 May 2024
Once you have decided you are comfortable with the risks involved in buying shares, your next step is to start understanding the process.

A 100% stock portfolio that replicates the S&P500 index, a benchmark of the performance of the U.S. stock market overall, returned a historic annualized average return of around 11.88% since its 1957 inception. While that average number may sound attractive, timing is everything. Once you have decided you are comfortable with the risks involved in buying shares, your next step is to start understanding the process. 

There is quite a bit you should know before you dive in. If you want to buy shares right away, here is a quick guide.

How to Buy Shares - Quick Guide

  • Open an account to buy shares – You’ll first need a brokerage account, which you can set up in about 15 minutes. Then, once you’ve added money to the account, you can purchase and sell a stock, hold the shares and collect any dividends that are paid. 
  • Choose the shares you want to buy – Choose between individual shares, including many mega-cap companies like Apple, Google, and Amazon, or a basket of shares representing a market, a sector, or a theme.  
  • Buy shares – Pick an order type, the amount you want to invest, and execute trades in your account. Follow the steps below to optimize your stock portfolio over time. 

For more info about how to buy shares and the steps you need to take to become a stockholder, you can discover everything you need to know in this guide.  

Why do people buy shares? 

People buy shares in the hopes of making a return on their investment – ie with the aim of selling them for a profit. If the share price increases while you are holding them, you will be able to sell them for a better price. 

Another way to earn returns on shares is through dividends if the company pays them out. Dividends are regular payments made to shareholders from a company's profits or retained earnings. If you receive dividends, you can decide whether to utilize them as income or reinvest them to increase your ownership of the company. 

If you choose to reinvest your dividends, your distribution would be used to purchase further company shares rather than being credited to your account. If a result, as the company performs, your shareholding will gradually expand. The benefits of compounding may result in a bigger overall return for you. 

Earn returns over time 

Share prices constantly fluctuate based on a company’s performance, as well as other factors like market volatility. If you own company shares, you’ll make a profit or loss based on the stock’s performance over time. 

Investing in stocks is a long-term strategy, and you’ll need patience when the market fluctuates. The risk-reward trade-off (the idea that the higher the risk appetite you have, the greater the potential reward) may encourage some investors to buy into companies that show potential for growth. However, this is never guaranteed, and your returns can be less than your initial investment. 

Earn returns to beat inflation 

The purpose of venturing into share dealing is to earn income that’s higher than the inflation rate. However, this isn’t guaranteed because the return on investments (ROI) isn’t certain. 

If your money isn’t earning interest to equal inflation, you’re losing your wealth. When you invest money, you face several types of risk. But, if you make positive returns, you’re essentially earning a reward for taking that risk. If you decide to rather hold onto your money because it’s a riskless alternative, it isn’t earning any interest – it’s only losing value due to inflation. This is where the risk-reward trade-off of investing comes in. 

For example, if you start out with $10,000 cash, you’ll still have $10,000 cash in five years, but the buying power would have decreased due to inflation. When investing the money, you could have more or in five years if the investment pays off. However, you could also lose money. 

Earn returns through dollar cost averaging 

You can earn returns through dollar cost averaging, which protects your investment from being eroded if the stock prices are falling. Dollar-cost averaging involves investing smaller amounts of capital incrementally over time, instead of taking a single lump sum position. 

Market trends are never constant, so distributing your investments over several positions enables you to achieve a much lower average cost. Continuously taking positions over time has the potential to lead to you earning more returns than if you’d only bought into the market once. 

You’ll need to take into consideration that performing multiple transactions over time will incur several costs such as commission. Your aggregate profit – if your predictions are correct – will reflect the cost of taking multiple positions.  

How to Buy Shares - Step By Step Guide

It may seem confusing at first, but buying stocks is straightforward. Here are for steps to help you understand how to buy stocks: 

  1. Open an account to buy shares
  2. Research and analyze the shares you want to buy
  3. Execute trades to buy shares on your account
  4. Optimize your stock portfolio 

Step 1: Open a brokerage account to buy shares 

Wondering where to buy shares? Movies love to show frenzied traders shouting orders on the floor of the New York Stock Exchange, but these days very few stock trades happen this way. Today, the easiest option is to buy shares online through an investing account. 

A brokerage account is a tool you can use to invest in the stock market. You can open a brokerage account with online brokers like A broker maintains your brokerage account and acts as the custodian for the securities you own in your account. It acts as the intermediary between you and the stock market, buying and selling assets on your instructions. 

Opening an online brokerage account is as easy and straightforward: You complete an account application, provide proof of identification, and choose whether you want to fund the account. With, you can choose from the multiple payment methods available in your country. 

After opening and funding your account, you can buy stocks through the broker’s website in a matter of minutes. 

Investing vs Trading 

Brokerage accounts are used for day trading aiming to earn short-term profits, as well as investing for long-term goals.   

Investors buy shares outright in the hope that they will increase in price and can be sold later for a profit. They own a portion of the company. 

However, for short-term speculative investing, a CFD trading account is more suitable than a Share Dealing account or Invest account that allows purchasing traditional shares. 

Trading stocks means that you’re speculating on a share’s price movements with derivatives like CFDs – without taking direct ownership. CFDs are leveraged products, which means that you won’t need to commit to the full value of the position. But bear in mind that leverage can increase both your profits and your losses. 

With CFDs, you can ‘buy’ (go long) the shares if you think the stock’s price will rise, or you can ‘sell’ (go short) if you think the stock’s price will fall. Shorting with derivatives can be an effective way to hedge against downward price movements in your non-leveraged investment portfolio, or it can be a way to generate profits outright from shares that are falling in value. But when you go short your potential losses are theoretically uncapped because there’s no limit on how high something’s price can rise. 

Financial Security 

When you open a brokerage account with a regulated stockbroker, you have access to all our robust financial security mechanisms as well as client protection policies. 

  • Segregation of Funds: According to CySEC regulations, all client funds are kept in separate accounts, different from company accounts, and in a banking institution within the EU. This certifies that funds are always available to clients and that they cannot be used by us for any other purpose. This is constantly checked by auditors. 
  • Investor Compensation Fund (ICF): The purpose of the ICF is to secure the claims of insured clients against the members of the ICF by paying compensation if the necessary conditions are met. The Investor Compensation Fund (ICF) can pay compensation of up to EUR 20,000 to a client who is insured.

Step 2: Research and select your stocks  

Once you have set up and funded your brokerage account, it’s time to dive into the business of picking stocks. There are thousands of different publicly traded companies offering shares of stock on the market. That makes it daunting to decide which stocks to buy. One way to think about researching the stocks you want to buy is to adopt a well-thought-out strategy, like buying growth stocks or buying a portfolio of dividend stocks. 

  • Growth stocks are shares of companies that are seeing rapid, robust gains in profits or revenue. They tend to be relatively young companies with plenty of room to grow, or companies that are serving markets with lots of room for growth. Whether the shares of a growth stock seem expensive or not, investing in growth stocks assumes that continued rapid growth will deliver strong price gains over time. 
  • Value stocks are shares of stock that are priced at a discount and stand to see price gains as the market comes to recognize their true value. With value investing, you’re looking for “shares on sale,” with low price-to-earnings and price-to-book ratios. The aim is to buy stocks that are under-priced and hold on to them over the long term.
  • Dividend stocks pay out some of their earnings to shareholders in the form of dividends. When you buy dividend stocks, the goal is to achieve a steady stream of income from your investments, whether the prices of your stocks go up or down. Certain sectors, including utilities and telecommunications, are also more likely to pay dividends than electric vehicle stocks. 

Do not let the deluge of data and real-time market gyrations overwhelm you as you conduct your research. Keep the objective simple: You are looking for companies of which you want to become a part-owner. 

The 1st criteria 

Start with identifying the currencies you want to represent in your portfolio, then you allocate a percentage of your portfolio to each one, and finally, you research the individual shares that provide that given percentage exposure. That is the initial idea, as a promising investment denominated in the wrong currency may become a bad investment and vice-versa. 

a) Identify the right currencies  

  • Study currency market weekly or monthly charts or representative currency indexes for your projected holding period. If you’re planning to buy and hold stocks for months to years, you want to see trends over the prior few years. For support, read also what is forex and how it works. 
  • Identify the currencies with the healthiest uptrends over that period.  
  • Check that the underlying national economic fundamentals support that trend with good growth, or at least consistently low ratios of debt to the gross domestic product (GDP) and culture of fiscal discipline, not growing budget and trade deficits.  

b) Allocate a percentage of your portfolio to each currency  

  • Allocate percentages of your portfolio to instruments denominated in or tied to those currencies that are more likely to appreciate in the long run.  

c) Choose the individual shares that provide that given percentage exposure 

  • Then shop around for specific assets you want that are denominated in or exposed to those currencies so that you have a set portion of your portfolio in assets tied to those currencies.  

The 2nd criteria 

Here is a quick summary of what to look especially when you buy shares to hold, keeping in mind the points discussed above.  

  • The dividend yield is over 5%, but the payout ratio is below 100%. 
  • Average volume over 300,000 shares. 
  • Priced over $2, no penny stocks. 
  • IPO date more than a year ago; preference is given to stocks that have been publicly traded for 10 years or more. 
  • P/E greater than zero (shows the company is profitable). Consider looking for stocks with a low P/E, for example, greater than zero but less than five. Also, consider looking at stocks where the Forward P/E is lower than the current P/E. This shows earnings are expected to increase, and if they do the stock is a better buy at the current price.  
  • Operating Margin Over 10%.  

The 3rd criteria 

View charts of the shares produced by the screener above. The next criterion for buying shares is: 

Only buy shares at the major long-term support area. We want to buy shares at cheap prices (compared to historical values), not expensive prices. Investment trades don’t require a stop loss, but you should have a price in mind where you get out if conditions don’t improve for the stock. An investment doesn’t mean you hold it forever if it doesn’t do what you expect. Have a low tolerance for shares that keep dropping. 

Also, have an exit plan for how you will exit a profitable investment. Define how and why you will exit. Since we used support to get into the investment, you may consider exiting just below a long-term resistance level. Once you are out of your investment, don’t worry about what the shares do after. Take the money and if you wish to buy other shares, go through the same process again, as discussed above. 

This brings us to one final guideline for buying shares: 

If buying shares at support and planning to exit just below resistance, the upside potential should outweigh the downside risk by at least 2:1. That means that if you buy shares at $75, you should be able to get out of the stock at $50 or higher. You limit your potential loss to $25 a share if based on the historical chart it is quite feasible to make $50 per share or more. So, when you buy shares the distance from the entry point to the resistance (profit target) should be at least x2 the distance from the entry point to the support level (potential loss). This is known as the risk/reward ratio. 

Step 3: Execute trades in your account   

Once you’ve opened and funded a brokerage account and then identified stocks you’d like to buy, it’s time to execute trades in your account. Before you put in an order to buy stock, you need to understand a few details about the process—purchasing stock isn’t as simple as just pressing a buy button on an app. You’ll generally have to pick an order type, which provides instructions on how you want to purchase a stock. 

Terms like “market order” and “limit order” may sound complicated but, they are simple concepts that you can understand with just a little bit of work after you learn how to buy shares.  

Market Order 

One of the ways to buy shares online is through a market order. Market orders simply tell your broker that you are willing to take whatever price is presented to you when your order is executed. These orders are often subject to the lowest commission since they are the easiest to execute.  

Imagine you want to buy 100 shares of Tesla (#TSLA). The current market price is $953.40. You log into your brokerage account and place a market order for 100 shares of Tesla, ticker symbol TSLA. By the time the order is executed a few milliseconds later, the market price may be higher or lower: $953.50 or $951.60, for example. Your total cost before commissions will vary accordingly. 

Limit Order 

A limit order allows you to limit either the maximum price you pay or the minimum price you are willing to accept when buying or selling shares. The primary difference between a market order and a limit order is that your broker cannot guarantee that the latter will be executed.  

Imagine an investor is worried about buying NIO shares for a higher price and thinks it is possible to get them for a lower price instead, it might make sense to enter a limit order. If at some point during the trading day, NIO drops to the lower price or below, the order will be triggered, and the investor will have bought NIO at the specified pre-set limit order price or less. Of course, this also means that if at the end of the trading day, NIO does not go as low as the investor's set limit order, the order will be unfilled. 

The risk inherent to limit orders is that should the actual market price never fall within the limit order guidelines, the investor's order may fail to execute. Another possibility is that a target price may finally be reached, but there is not enough liquidity in the stock to fill the order when its turn comes. A limit order may sometimes receive a partial fill or no fill at all due to its price restriction. 

Stop Orders 

In common parlance, stop and stop-limit orders are known as “stop-loss” orders because speculators use them to lock in profits from profitable trades. Most investors don’t concern themselves with these kinds of orders, but it’s worth understanding how they work. 

A stop order automatically converts into a market order when a predetermined price is reached (this is referred to as the “stop price”). At that point, the ordinary rules of market orders apply; the order is guaranteed to be executed, you simply don’t know the price – it may be higher or lower than the current price reported on the ticker symbol. 

Contrast that to a stop-limit order, which automatically converts into a limit order (not a market order) when the stop price is reached. As discussed above, your order may or may not be executed depending upon the price movement of the security. 

If you have a small balance in your account but the share prices of stocks, you’re looking to buy are very high, consider fractional shares. Take Google parent, Alphabet, Inc.: As of late September 2022, Alphabet is priced at nearly $2,000 a share. With fractional shares, you could invest as little as $20 dollars in the stock. 

Step 4: Optimize your portfolio  

Buying a stock is only part of the process of being a stockholder. You’ll also need to continue following the company, tracking quarterly or annual earnings, and keeping up with the industry. And as the company performs well, you can allocate more money to the position. Then you can add more stocks to your portfolio as your expertise grows. 

Along the way, your stock will decline at some point, even if it’s only temporary. Understanding the company can help you decide whether it’s time to buy more stock at a discount or sell. 

Use Dollar-Cost Averaging to Buy Stock Over Time 

The trouble with US markets and any other stock market is that prices fluctuate constantly. You may have your eye on a stock that looks reasonably priced today, but who’s to say whether the price will be higher or lower tomorrow? 

Dollar-cost averaging provides a solution to this problem: Buy stocks with a set amount of money at regular intervals, and you may pay less per share on average over time. Crucially, dollar-cost averaging allows you to get started buying stocks right away, with a little bit of money, rather than waiting to build your balance. This mitigates the risk you buy either extremely high or low since you’re spreading out your purchases over a long period of time. 

Let’s say you use dollar-cost averaging to buy your target stock at $5 a share in week one, $10 a share in week two, and $9 a share in week three. On average, you’ve paid $8 a share—better than if you had mistimed your purchase and gone all in at $10 a share, only to see the price drop. Plus, investing the same dollar amount each time would buy you more stock at $5 a share than at either of the other price points. 

Buy low and sell high is a mantra for successful stock purchasing you’ve probably heard more than once. But practicing it can be psychologically challenging, and it can be very, very difficult even for experts to agree on what “low” and “high” are for a given stock. Automated, recurring stock purchases that use dollar-cost averaging help you sidestep the challenge and make investing routine. 

Consider buying stock funds 

Building a diversified portfolio with individual stocks can be time-consuming, especially for people just starting out. That's why experts recommend beginner investors focus on Exchange-traded-Funds (ETFs), which give you a wide selection of stocks in one go. 

"Stock fund" and "equity fund" describe a type of investment company that invests primarily in stocks or "equities". Stock investment funds offer exposure to the world’s largest, most liquid stock markets, and can give investors the ability to own stocks in some of the world’s most successful companies. 

Unlike stocks, which represent just one company, ETFs represent a basket of stocks tracking a stock index (such as the SPDR S&P 500 ETF - SPY, or the SPDR Dow Jones Industrial Average - DIA), a sector (such as energy - XLE, technologies - XLK, utilities - XLU, or financial services -XLF) or a specific theme (such as Global X Renewable Energy ETF – RNRG, Columbia PROP Reit ETF - CXP or the iShares U.S. Oil & Gas Exploration & Production ETF - IEO).  

Since ETFs include multiple assets, they may provide better diversification than a single stock. That diversification can help reduce your portfolio’s exposure to risk. Exchange-traded funds let you invest in lots of stocks all at once, and ETFs often have lower fees than other types of funds. ETFs are traded more easily too. 

Think Carefully About When to Sell Your Stock 

Much is made about buying shares; investors tend to put far less thought into how to sell shares. 

That is a mistake, as the sale is when the money is made. Getting it right can be key to claiming your profits — or, in some cases, cutting your losses. 

The ideal time to sell your stocks is when you need the money. Long-term investors should have a strategy centered on a financial goal and a timeline for achieving it. That means it should include a plan to start tapping your investments and using the cash you’ve accumulated when the time is right. 

That also means that deciding when you should sell a stock has very little to do with what the stock or broader markets are doing at any given moment. Unless you’re day trading and looking to turn a quick profit—which is much riskier than long-term investing—you don’t even have to worry about watching day-to-day price movements. 

If you’re second guessing whether you should hold onto a losing stock, think again about why you bought it in the first place and decide whether anything has fundamentally changed. If not, a dip in the price might actually be a good time to buy more.

Get started with

Discover how to buy shares with our market-leading offering – and take your position today. 

1. Open a share dealing account

With us, you can create an Invest account to buy a stake in a company. On our platform, you’ll find 5,000+ shares and ETFs. With a competitive fee structure, you’ll pay zero commission on trades depending on the account type. 

Start your journey by creating a demo account to practice your strategy. There are no sign-up or exit fees, with no obligation to fund until you’re ready. 

2. Deposit funds 

Once you’ve opened your share dealing account, you can deposit funds into it using any card, Skrill, Neteller, or bank account that’s registered in your name. With us, there’s no minimum deposit for a bank transfer, however, credit or debit card providers and other money transfer providers may have a minimum amount limit. 

3. Pick your stock or ETF 

Browse our award-winning platform to find our full range of shares, ETFs, and investment trusts you can buy. There are 5,000+ shares to choose from in a variety of sectors. You can access the platform and our support line 24 hours a day, but you can only deal shares during market hours.  

buy shares

4. Set how many shares you want to buy 

When you’re ready to invest, you can set the number of shares you want to buy or enter the amount of capital you want to spend. You also have to determine the timeframe of your position, taking into consideration the trading trends that support a short-, medium- or a long-term investment. 

5. Place your order 

With us, you can choose to deal with shares using market and limit orders. When buying at the market price, we’ll show you the best available price, and you’ll be asked to confirm your order. Otherwise, you’d select an order type and price. Orders enable you to set the price at which you want to buy and sell shares with a willing counterparty.  

Final words about buying shares online 

We hope the purchase of your first share marks the beginning of a lifelong journey of successful trading and investing. But if things turn difficult, remember that every investor — even Warren Buffett — goes through rough patches. The key to coming out ahead in the long term is to keep your perspective and concentrate on the things that you can control. Market gyrations aren’t among them. What you can do is:

Make sure you have the right skills.

CAPEX Academy can help you master the essentials of trading and investing.

Be mindful of brokerage fees

These can significantly erode your returns. With you can enjoy 0 commission investing.

Consider diversification

ETFs (Exchange-Traded-Funds) allow you to buy many stocks in one transaction. 

Free Resources  

Before you start trading securities, you should consider using the educational resources we offer like CAPEX Academy or a demo trading account. CAPEX Academy has lots of free investing courses for you to choose from, and they all tackle a different financial concept or process – like the basics of analyses – to help you to become a better trader or make more-informed investment decisions.  

Our demo account is a suitable place for you to learn more about derivatives trading, and you’ll be able to get an intimate understanding of how trading and investing work – as well as what it’s like to trade with leverage – before risking real capital. For this reason, a demo account with us is a great tool for investors who are looking to make a transition to leveraged securities. 


This information prepared by is not an offer or a solicitation for the purpose of purchase or sale of any financial products referred to herein or to enter into any legal relations, nor an advice or a recommendation with respect to such financial products.This information is prepared for general circulation. It does not regard to the specific investment objectives, financial situation or the particular needs of any recipient.You should independently evaluate each financial product and consider the suitability of such a financial product, by taking into account your specific investment objectives, financial situation, or particular needs, and by consulting an independent financial adviser as needed, before dealing in any financial products mentioned in this document.This information may not be published, circulated, reproduced, or distributed in whole or in part to any other person without the Company’s prior written consent.
Past performance is not always indicative of likely or future performance. Any views or opinions presented are solely those of the author and do not necessarily represent those of Financial Services (Pty) Ltd trading as CAPEX.COM/ZA acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via CAPEX.COM/ZA, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15.  Magnasale Trading Ltd is the principal to the CFD purchased by investors.

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Cristian Cochintu
Cristian Cochintu
Financial Writer

Cristian Cochintu writes about trading and investing for Cristian has more than 15 years of brokerage, freelance, and in-house experience writing for financial institutions and coaching financial writers.