How To Buy Stocks For Beginners 📈 OPENING A TRADING ACCOUNT
How's it going today guys so I have another video here and this is actually something that a what have you guys who watch my channel sent me a question wanted me to explain basically how you go about opening up your first trading account and it's really cool that I got this message because a lot of the times I don't know what you guys want to see and this is something I would have never thought of because I did this so long ago I opened my first trading account over a year and a half ago so it didn't really occur to me that this would be something somebody might want to know like how to go about doing this so if you guys have any other questions that you want me to answer so you know send me a message on youtube you know probably the best way to get a hold of me is on Twitter because I'm most active on that some of you message there and if you have something you want me to cover in a video I'll try to work it in somewhere to explain things to you guys better but what we're going to be talking about is how to open up a trading account and some of the stuff that's involved with that process so the first step with this is um you want to have a cash cushion and here's why I actually made this mistake myself if you don't have enough money to cover all of your possible expenses for the next six months you shouldn't be trading because here's what's going to happen if you're investing money that you might need in a pinch you could get caught in a situation where you have to sell regardless of if the market is up or if the market is down this happened to me because I was um I had too much money tied up in one of my mutual funds and I was buying a car at the time and I didn't have enough money to cover the taxes and DMV fees because I really never thought of it so I had to go oh I bet herself some of my mutual fund and I didn't have the ability to see if it was a good time or a bad time to sell I had no choice I had to sell because I needed to cash within like a week and there was no other way for me to get so you don't want to tie up money that you could possibly need because then you're going to put yourself in a bad situation where the markets down and you have no choice you need to cash you're taking a loss at that point so your first step with opening a trading account is to make sure you have a six month cushion in place but as far as it goes for beginning trading trading for beginners you know if you're just getting started and as far as everyone I know but they mostly use these online discount brokers I mean there are some people who have like a live stock broker you know you go call them up on the phone and make your trades but for the most part um it's just added steps in the process these days I mean if you want really specialized advice and if you want some market insight sometimes people will go for a human stock broker you know somebody who actually can talk to but for the most part if you're just looking to trade stocks kind of for fun or just as a hobby you're going to use an online discount broker and these are like the most common ones that I see people using I'll let you know which one I use too just so you know but fidelity is pretty popular Charles Schwab TD Ameritrade etrade and Scott trade for me I use Scott trade because what I was looking for was like the cheapest cost for trading and a low cash balance carry some of these brokers require you to carry a large cash balance so that's this is the thing with this guy's you want to do your research with these um see what they all have to offer you because everybody has a unique situation whether or not you're bringing in a large cash balance so that's how much you're depositing into the account so let's say somebody was depositing fifty thousand dollars and then there's somebody else depositing two thousand dollars um there's going to be different advantages to these brokers so you're going to want to do your research with that for me I chose Scott trade because they had a low trading fee of seven dollars a trade and they made I don't know if they were going to change that by the time you're watching this video but I'm pretty sure it's been seven dollars a trade for a good while now so I would be surprised to change that and they also didn't charge like a maintenance fee I know some of these accounts if your cash balance goes too low they're going to charge you a maintenance fee which is going to be wiping out your account every month so you don't want to be dealing with that so do your research when it comes to deciding on what broker you want to go with and there's a lot of websites you can go on that just compare all of them so you don't have to go comb through all of the websites there's ones that lay it all out for you so that's nice so as far as the steps go we kind of talked about the first one already where you want to build up your cushion a six-month cushion that way you're not in a pinch when you have to sell you know you don't want to be in that situation guys trust me your second step is to decide on an online discount broker I'm assuming that most of you are going to go this route because the human brokers as far as trading individual stocks it's really just makes the process a lot slower I mean if you wanted to sell your stock would you rather log onto your computer and sell or pick up your phone call your stockbroker tell him hey sell this so that he gets on his computer it sells it just adds steps to the process and for the most part human stockbrokers are a lot more expensive so you don't want to hang more Commission usually than you have to so then the third step is actually opening your trading account and a lot of people don't realize this but there's a lot of information they need from you in order to open that account I know for me um I was all excited about trading I was like ready to rock and roll and it was like pump the brakes man we got to like verify your identity I think it took over two weeks to get my account activated because I had to mail in a form send in copies of my license sending a copy of I'm eight I mean don't quote me on this but I made up said didn't like my birth certificate to they need some serious information for me to verify my identity because I didn't have any buying history at the time so there was nothing to go off of as far as my identity but the most common information they'll need from you is your social security number or your tax ID a license or passport a copy of that generally they want to know what your employment status is they want to know your annual income as well as your net worth and they also want to know what your investment objective is so you know popular true you know that's where you kind of choose what your strategy is if you're speculative if you're betting if you're investing in futures they kind of just want to know what type of investment you'll be doing they really do ask for a lot of information the reason they need your social security number is because you're going to be paying income tax on your returns let's say you make money out of stock you're going to pay taxes on at the end of the year that's why they need to have your tax ID or your social security number in order to you know send that over to the IRS to make sure that they get their fair share of that money okay so that keep in mind like I said can be anywhere from I don't know a week to maybe even a month I don't mind took at least two weeks as far as I remember so plan on this step here taking you you know at least two weeks as far as opening your trading account goes okay so then at this point you have your trading account set up your fourth step is going to be transferring your funds the way I do it is just for my checking account so like when I set up my trading account I just did my account number my routing number and then I think after three days or so that was active and I could you know send money in or request money but you can also if you want to do a check you can mail a check-in where you can do a Western Union cash transfer I have a mutual phone with Franklin Templeton and I know for that account I mailed a check just because that was the way I did that and it works just the same as doing it through checking maybe it took a little bit longer but there's generally a couple different ways you can transfer funds into your account so then step number five on this is when you have opened your account you have money and they're ready to go your fifth step five and six are very important I won't explain what your fifth step is to familiarize yourself with stock market order types now if you guys want more clarification on this I actually just finished my e-book on my stock market trading strategy guide and I will link that up in the description there should be a button on the top as well somewhere there if you want to learn more about that but in that ebook I actually go in-depth about stock market order types and watch which ones would be best for you but there's other resources available too when I'm sure any stock market broker any stock broker I mean any online discount broker they're going to have like a website set up to educate you because they don't want you just screwing around and losing all your money because they're making money off of you when you're trading so if you make two trades and you accidentally did the wrong order type and then you end up closing your account you know they want you to stay there they want you to be a happy trader because they make money from the addition of the traits so that step 5 is familiarize yourself with stock market order types because there are a lot of different ones and I made mistakes before too with not realizing what the order exactly meant doing like limit orders trailing stops it gets very confusing there's a lot to it so you really want to know what you're doing with that and then step number 6 very important step familiarize yourself with the trading platform um you don't want to be like ready to sell your stock this is your this is like okay I got my profit here I want to sell my stock and then go oh crap how do I sell you want to know exactly how to sell your stock that way you can just log on quick and unload it um another point or two I want to add I didn't have it on the board here but most of these online discount brokers have an app you can download on your phone I know Scottrade does so I can do all my trading right for my smartphone which is cool so it's not a bad idea to have that app as well if you want to log on quick and do your trades from wherever you are if you're not going to be stuck at your desk all day or whatever it may be and then there's a couple of other things I wanted to talk about as far as trading accounts go um they all have a different policy for the most part on your uninvested cash I don't know how big of a factor this is for you but some of them will put it into what's called like it's like a cash pool and they will basically give you a small like interest rate or dividend in exchange for you having your cash there so that way you maybe you might want to consider if you're going to have that captian in there for a long time what the interest rate is based on the different brokers they might have different interest rates and some of them may not even have that policy of what they're doing with your uninvested cash the other thing to when you're making your account this is very very important if you want to open a cash account versus a margin account the way a cash account works is when you buy a stock buy shares of a stock you're paying for the stock at the time of purchase in full with cash in your account when you open a large an account your stock broker is giving you a loan on the funds that you put in so it's possible that you may put in $10,000 and then you're going to get a loan of $10,000 in the margin account so your buying power is actually twenty thousand at that point however ten thousands a loan for the most part I'm going to say like 99.9% of beginning traders don't do this this is a good way to really lose a lot of money and end up in debt here's a major problem with a margin account there's something called a margin call and every stockbroker has a different policy on this but what this generally allows the broker to do is if your stock goes way down they can call you up on the phone and say you need to deposit cash by the end of the day because we don't trust you to make the payment or this is even worse they may have the ability to sell any securities in your account to cover the loss so you could be trading a stock on margin have it fallen value they'll sell off shares of a completely different stock to cover that loss um not something the average investor wants to be involved with nothing lie that would scare the crap out of me that's why I would recommend a cash account to pretty much everyone I'm going to say that right now I don't even know any beginner that I would recommend a margin account to I don't mess around margin accounts I don't think I ever will to be honest with you but that's pretty much it guys that's like your steps to opening a trading account like I said Scott trade is the platform that I use and I know a lot of people who use these other ones too and I just want to throw out there too I'm not like getting paid by Scott trade or anything to help you know to mention them in this video I just like to be transparent about exactly what I'm doing is I think it helps you guys out more and then like I mentioned earlier in the video if you guys are interested I do have my ebook on my stock market trading strategy and that's pretty much what I learned over many months of reading books and guides and talking to stock market traders and investors I compiled all the best information into this eBook and it pretty much lays out my exact stock market trading strategy and I've been able to make consistent profits every week trading stocks and I only spend about an hour to a week doing it so it's a nice little income source for me it can be for a lot of people it's really not that hard to do it but I hope this helps you guys out as far as um getting your account opened up and getting started out with stock market trading and like I said if you have any other topics you want me to cover please drop a comment below or send me a message and let me know I'll be happy to do that thank you guys for watching
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How's it going today guys so I have another video here and this is actually something that a what have you guys who watch my channel sent me a question wanted me to explain basically how you go about opening up your first trading account and it's really cool that I got this message because a lot of the times I don't know what you guys want to see and this is something I would have never thought of because I did this so long ago I opened my first trading account over a year and a half ago so it didn't really occur to me that this would be something somebody might want to know like how to go about doing this so if you guys have any other questions that you want me to answer so you know send me a message on youtube you know probably the best way to get a hold of me is on Twitter because I'm most active on that some of you message there and if you have something you want me to cover in a video I'll try to work it in somewhere to explain things to you guys better but what we're going to be talking about is how to open up a trading account and some of the stuff that's involved with that process so the first step with this is um you want to have a cash cushion and here's why I actually made this mistake myself if you don't have enough money to cover all of your possible expenses for the next six months you shouldn't be trading because here's what's going to happen if you're investing money that you might need in a pinch you could get caught in a situation where you have to sell regardless of if the market is up or if the market is down this happened to me because I was um I had too much money tied up in one of my mutual funds and I was buying a car at the time and I didn't have enough money to cover the taxes and DMV fees because I really never thought of it so I had to go oh I bet herself some of my mutual fund and I didn't have the ability to see if it was a good time or a bad time to sell I had no choice I had to sell because I needed to cash within like a week and there was no other way for me to get so you don't want to tie up money that you could possibly need because then you're going to put yourself in a bad situation where the markets down and you have no choice you need to cash you're taking a loss at that point so your first step with opening a trading account is to make sure you have a six month cushion in place but as far as it goes for beginning trading trading for beginners you know if you're just getting started and as far as everyone I know but they mostly use these online discount brokers I mean there are some people who have like a live stock broker you know you go call them up on the phone and make your trades but for the most part um it's just added steps in the process these days I mean if you want really specialized advice and if you want some market insight sometimes people will go for a human stock broker you know somebody who actually can talk to but for the most part if you're just looking to trade stocks kind of for fun or just as a hobby you're going to use an online discount broker and these are like the most common ones that I see people using I'll let you know which one I use too just so you know but fidelity is pretty popular Charles Schwab TD Ameritrade etrade and Scott trade for me I use Scott trade because what I was looking for was like the cheapest cost for trading and a low cash balance carry some of these brokers require you to carry a large cash balance so that's this is the thing with this guy's you want to do your research with these um see what they all have to offer you because everybody has a unique situation whether or not you're bringing in a large cash balance so that's how much you're depositing into the account so let's say somebody was depositing fifty thousand dollars and then there's somebody else depositing two thousand dollars um there's going to be different advantages to these brokers so you're going to want to do your research with that for me I chose Scott trade because they had a low trading fee of seven dollars a trade and they made I don't know if they were going to change that by the time you're watching this video but I'm pretty sure it's been seven dollars a trade for a good while now so I would be surprised to change that and they also didn't charge like a maintenance fee I know some of these accounts if your cash balance goes too low they're going to charge you a maintenance fee which is going to be wiping out your account every month so you don't want to be dealing with that so do your research when it comes to deciding on what broker you want to go with and there's a lot of websites you can go on that just compare all of them so you don't have to go comb through all of the websites there's ones that lay it all out for you so that's nice so as far as the steps go we kind of talked about the first one already where you want to build up your cushion a six-month cushion that way you're not in a pinch when you have to sell you know you don't want to be in that situation guys trust me your second step is to decide on an online discount broker I'm assuming that most of you are going to go this route because the human brokers as far as trading individual stocks it's really just makes the process a lot slower I mean if you wanted to sell your stock would you rather log onto your computer and sell or pick up your phone call your stockbroker tell him hey sell this so that he gets on his computer it sells it just adds steps to the process and for the most part human stockbrokers are a lot more expensive so you don't want to hang more Commission usually than you have to so then the third step is actually opening your trading account and a lot of people don't realize this but there's a lot of information they need from you in order to open that account I know for me um I was all excited about trading I was like ready to rock and roll and it was like pump the brakes man we got to like verify your identity I think it took over two weeks to get my account activated because I had to mail in a form send in copies of my license sending a copy of I'm eight I mean don't quote me on this but I made up said didn't like my birth certificate to they need some serious information for me to verify my identity because I didn't have any buying history at the time so there was nothing to go off of as far as my identity but the most common information they'll need from you is your social security number or your tax ID a license or passport a copy of that generally they want to know what your employment status is they want to know your annual income as well as your net worth and they also want to know what your investment objective is so you know popular true you know that's where you kind of choose what your strategy is if you're speculative if you're betting if you're investing in futures they kind of just want to know what type of investment you'll be doing they really do ask for a lot of information the reason they need your social security number is because you're going to be paying income tax on your returns let's say you make money out of stock you're going to pay taxes on at the end of the year that's why they need to have your tax ID or your social security number in order to you know send that over to the IRS to make sure that they get their fair share of that money okay so that keep in mind like I said can be anywhere from I don't know a week to maybe even a month I don't mind took at least two weeks as far as I remember so plan on this step here taking you you know at least two weeks as far as opening your trading account goes okay so then at this point you have your trading account set up your fourth step is going to be transferring your funds the way I do it is just for my checking account so like when I set up my trading account I just did my account number my routing number and then I think after three days or so that was active and I could you know send money in or request money but you can also if you want to do a check you can mail a check-in where you can do a Western Union cash transfer I have a mutual phone with Franklin Templeton and I know for that account I mailed a check just because that was the way I did that and it works just the same as doing it through checking maybe it took a little bit longer but there's generally a couple different ways you can transfer funds into your account so then step number five on this is when you have opened your account you have money and they're ready to go your fifth step five and six are very important I won't explain what your fifth step is to familiarize yourself with stock market order types now if you guys want more clarification on this I actually just finished my e-book on my stock market trading strategy guide and I will link that up in the description there should be a button on the top as well somewhere there if you want to learn more about that but in that ebook I actually go in-depth about stock market order types and watch which ones would be best for you but there's other resources available too when I'm sure any stock market broker any stock broker I mean any online discount broker they're going to have like a website set up to educate you because they don't want you just screwing around and losing all your money because they're making money off of you when you're trading so if you make two trades and you accidentally did the wrong order type and then you end up closing your account you know they want you to stay there they want you to be a happy trader because they make money from the addition of the traits so that step 5 is familiarize yourself with stock market order types because there are a lot of different ones and I made mistakes before too with not realizing what the order exactly meant doing like limit orders trailing stops it gets very confusing there's a lot to it so you really want to know what you're doing with that and then step number 6 very important step familiarize yourself with the trading platform um you don't want to be like ready to sell your stock this is your this is like okay I got my profit here I want to sell my stock and then go oh crap how do I sell you want to know exactly how to sell your stock that way you can just log on quick and unload it um another point or two I want to add I didn't have it on the board here but most of these online discount brokers have an app you can download on your phone I know Scottrade does so I can do all my trading right for my smartphone which is cool so it's not a bad idea to have that app as well if you want to log on quick and do your trades from wherever you are if you're not going to be stuck at your desk all day or whatever it may be and then there's a couple of other things I wanted to talk about as far as trading accounts go um they all have a different policy for the most part on your uninvested cash I don't know how big of a factor this is for you but some of them will put it into what's called like it's like a cash pool and they will basically give you a small like interest rate or dividend in exchange for you having your cash there so that way you maybe you might want to consider if you're going to have that captian in there for a long time what the interest rate is based on the different brokers they might have different interest rates and some of them may not even have that policy of what they're doing with your uninvested cash the other thing to when you're making your account this is very very important if you want to open a cash account versus a margin account the way a cash account works is when you buy a stock buy shares of a stock you're paying for the stock at the time of purchase in full with cash in your account when you open a large an account your stock broker is giving you a loan on the funds that you put in so it's possible that you may put in $10,000 and then you're going to get a loan of $10,000 in the margin account so your buying power is actually twenty thousand at that point however ten thousands a loan for the most part I'm going to say like 99.9% of beginning traders don't do this this is a good way to really lose a lot of money and end up in debt here's a major problem with a margin account there's something called a margin call and every stockbroker has a different policy on this but what this generally allows the broker to do is if your stock goes way down they can call you up on the phone and say you need to deposit cash by the end of the day because we don't trust you to make the payment or this is even worse they may have the ability to sell any securities in your account to cover the loss so you could be trading a stock on margin have it fallen value they'll sell off shares of a completely different stock to cover that loss um not something the average investor wants to be involved with nothing lie that would scare the crap out of me that's why I would recommend a cash account to pretty much everyone I'm going to say that right now I don't even know any beginner that I would recommend a margin account to I don't mess around margin accounts I don't think I ever will to be honest with you but that's pretty much it guys that's like your steps to opening a trading account like I said Scott trade is the platform that I use and I know a lot of people who use these other ones too and I just want to throw out there too I'm not like getting paid by Scott trade or anything to help you know to mention them in this video I just like to be transparent about exactly what I'm doing is I think it helps you guys out more and then like I mentioned earlier in the video if you guys are interested I do have my ebook on my stock market trading strategy and that's pretty much what I learned over many months of reading books and guides and talking to stock market traders and investors I compiled all the best information into this eBook and it pretty much lays out my exact stock market trading strategy and I've been able to make consistent profits every week trading stocks and I only spend about an hour to a week doing it so it's a nice little income source for me it can be for a lot of people it's really not that hard to do it but I hope this helps you guys out as far as um getting your account opened up and getting started out with stock market trading and like I said if you have any other topics you want me to cover please drop a comment below or send me a message and let me know I'll be happy to do that thank you guys for watching
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