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How to Be a Stock Market Trader

Updated: Feb 7, 2023

Placing your own trades is easy

The stock market has become more and more accessible over the years, and do-it-yourself investing has gained popularity for good reason. The benefits are huge: having an understanding of what you are invested in, feeling in control of your investments, and saving money on fees are the payoffs of spending a little time up front learning the ropes. There are a few things you need to learn: how to allocate your money between asset classes (cash, bonds, stocks), which investments to buy, which accounts to use, and how to place trades. Of all of these items, trading is the easiest to learn and you can quickly knock it off your list of excuses for why you don’t want to DIY invest.

If you are comfortable doing transactions online like buying groceries, booking Air BnB accommodations, and paying bills, then you can also place your investment trades online. It’s no more complicated than any of those things, and probably easier than booking plane tickets.

When you think of trading stocks, you probably have in image in your mind of men (yes, men) in weird jackets on the trading floor of the stock exchange yelling things and perhaps holding their heads in their hands. Or you might envision a line of desks and computers on a trading floor, with people on the phone, shouting at each other and looking frantic.

The media’s portrayal of stock market trading makes it look intimidating and chaotic. Although this version of stock trading does exist (although physical trading floors are mostly phased out), complex trading systems, loud instructions, and swearing aren’t required. For do-it-yourself investors, the picture is simpler: a woman sits at her kitchen table with her laptop open drinking coffee, a young person sits on a park bench with their phone in hand, a grey-haired couple gaze at their computer screens with affection. As cheesy as these stock photos are, they are actually pretty accurate portrayals of what stock trading looks like for the individual investor.

Three things you need to know.

If you have an inclination to manage your own investments but worry about the trading part, read on to see just how simple it is.

There are really just three things you need to know about placing trades: finding the ticker symbol, calculating the quantity, and choosing the order type.

1. Find the ticker symbol: You will need the ticker symbol to enter a trade. Every stock, mutual fund, and ETF has one. It is simply a code that identifies the investment, just like a product code on something you’d buy at the store. In most markets, it is a series of letters. For stocks, the ticker symbol is usually an obvious representation of the stock: TD for TD Bank, DOL for Dollarama, and so on. For mutual funds, the code is combination of letters and numbers, like TDB161 (TD Canadian Equity Fund). Exchange-traded funds are letters, like VGRO for the Vanguard Growth ETF Portfolio. (If you want to appear to be a seasoned investor, refer to stocks and ETFs by their ticker symbol as in “I just added VGRO to my portfolio.”) You can find the ticker symbol by doing a Google search, looking on Yahoo Finance, or by using the search function provided by your online broker.*

2. Calculate the quantity: You will need to enter the quantity you want to buy, either the number of shares (for stocks) or units (for a fund). This is simple math: find the price of the stock or unit (using Yahoo Finance or get a quote on the online broker site) and divide the total amount you want to invest by the price. So if you are investing $5,000 in TD Bank, you will buy 58 shares ($5,000 divided by $85/share = 58.8 rounded down to 58). You will enter 58 in the “Quantity” box.

3. Choose the type of order: You will need to choose the order type - a “market” order, a “limit” order or a “stop” order. For the vast majority of people, using a market order is appropriate; this simply means that your order will be filled at whatever the stock or ETF is trading at in the market when you click the “send order” button.** Limit and Stop orders are for people who want more control over what they pay for their investments. A Limit order allows you to tell the broker “I only want to buy TD if the price is $89.50 or lower.” A Stop order is an instruction for the broker to execute your order once the stock reaches a certain price. These are useful for active traders when markets are volatile but for most of us, a market order works just fine.

Once you enter this information, you will be able to review your order before sending it to be executed. You should check that you’ve:

  • Chosen the right account;

  • Entered the right investment, by reviewing both the ticker symbol and the name;

  • Entered the right quantity, by looking at the total value of the trade; and

  • Chosen the right currency, if you are buying something that trades in both Canadian and U.S. dollars.

When everything looks correct, hit “send” and that’s it. You’re officially a trader.

Investing has become more and more accessible over the years, and the emergence of online brokers plays a big role in this, making it easy to buy and sell your own investments. Don’t let the media’s portrayal of trading hold you back!

*An online broker is simply the website (or app) where you can see your accounts and your investments, and place your trades. Examples include CIBC Investor’s Edge, TD Direct Investing, and Questrade.

**Note that mutual funds do not trade throughout the day – you will pay whatever the price of the fund is at the end of the trading day.


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