Buying stocks in Canada is a relatively easy task, but needs to be done with the proper amount of caution in order to avoid serious financial losses. Canadian stocks are traded on the Toronto Stock Exchange in Canadian Currency. The easiest way to trade stocks in Canada is to open an online trading account that allows you real time access to buying and selling stocks while the market is open.
Open a trading account or find a broker. In order to trade stocks in Canada you will either need to have your own online trading account, such as those offered by TD Waterhouse Discount Brokerage, or you will need a broker who will trade the stocks for you. The advantages of an online trading account include significantly lower commissions and the ability to control your trades personally from anywhere that has an Internet connection.
Watch the stocks you want to buy. In order to make a wise investment, whether you plan to trade stocks on a daily basis, weekly, or more long term, it is important that you become educated about the companies in which you want to buy shares. You will want to become familiar with how much the stock price fluctuates, its financial reports, and general information about the industry that may influence the particular company that you are investigating.
Decide on the price you want to pay for the stock. Once you have monitored the stock for a while and observed how the price fluctuates, you can decide on a price that you want to pay for the stock. You want to buy the stock when it is at a lower price and you anticipate the stock going higher after your purchase.
Submit your order to purchase. If you are using an online brokerage, this is as easy as a few clicks of the mouse. Simply enter the stock that you wish to purchase, provide the details of your purchase (number of shares, maximum price you are willing to pay per share, and expiry date of your order). Be sure to confirm your order when prompted. If you are using a broker, then you will need to provide your broker with the same information, as well as ensure that he or she has access to your funds, usually by opening an account with their brokerage.
Confirm your purchase. Simply placing an order to purchase does not guarantee that your order will be filled, especially if you have specified a limit on your purchasing price. Continue to watch your stock, as you may want to adjust your order if you see that the price is fluctuating either up or down. Until your order has been filled, it is possible to change the details of your order, or cancel the order altogether. Once your order has been filled, or partially filled, you are the owner of the number of shares purchased.
Watch the stock. Now that you own your shares, you need to pay close attention to the stock. The level of attention you pay depends on the duration of your investment. If you have purchased stock in a company that you plan to hold onto for many years as a long term investment, then it is not necessary to check in on a daily basis. If, however, you plan on selling the stock relatively soon, even within the same day, then you must pay very close attention to the fluctuations in the stock price and any external events which may influence the stock value.
Decide when to sell. After careful observation you will want to determine the price at which you will sell your purchased shares. If all goes well, you will be selling at a price that is higher than the price at which you purchased your shares, which will lead to a profit. It is important to take into consideration any commissions that you will pay to your broker or discount brokerage when calculating your profit. Sometimes you will need to decide whether or not to sell your shares at a loss. If the stock price begins to drop and you do not feel that it will regain its value, you may need to take a loss by selling at a price lower than the one at which you purchased the stock.
Shop around for the brokerage that gives you the best commissions. Sometimes commissions change based on the volume of trades you make or the account balance that you maintain. Use a stock tracking application on your smart phone to watch your stocks when you are away from your computer.
There is no guaranteed return when trading stocks. You must exercise caution or risk losing your entire investment. Consider not investing more than you are willing to lose.
Tips and warnings
- Shop around for the brokerage that gives you the best commissions. Sometimes commissions change based on the volume of trades you make or the account balance that you maintain.
- Use a stock tracking application on your smart phone to watch your stocks when you are away from your computer.
- There is no guaranteed return when trading stocks. You must exercise caution or risk losing your entire investment.
- Consider not investing more than you are willing to lose.