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Let’s Make a Deal – The Basic Trade

Now that you are armed with that knowledge, you are going to want to buy your first stock. That is where our newsletters, NEWSPICKS and INVESTMENT OPPORTUNITY PICKS, come in handy. They will give you an idea of what might be a good bet. But let’s say you like XYZ because your Uncle Ralph says it’s a winner. How do you buy it? The first and easiest way will be to do a straight stock purchase without any attachments like stop loss limit’s and good till cancels. We will talk about them later. You call your broker (always when the market is open, between 9:30 AM and 4:00 PM EST), and the conversation will go like this (broker’s comments are in italicized type):

Hello, this is Joe Blow Brokers. Can I have your account number please?”

Yes, it is 5554752

“And your pin number?”

Yes, it is 3434

“Hello Mrs. Jones, what can I do for you today?”

Hi. I am interested in Xylophone Tech, symbol XYZ. What is that going for right now?

“Let’s see here…. okay that is 49.50 by 50″

Okay, I would like to purchase 100 shares of XYZ now.

“Will that be a market order?”

Yes.(*NOTE: a market order means that you are giving the go ahead to buy the stock at the price when the order is sent. It could have already gone up a dollar since you first dialed, but you will be filled.)

“Okay let me read this to you. You want to buy 100 shares of XYZ at market?”


“Okay the order is sent. Is there anything else I can do for you?”

Yes, you can tell me if the order was confirmed and at what price. (*NOTE: once the order is sent the most important thing to you is at what price did you actually get the order executed or “filled”.)

“Yes ma’am, you were filled on 100 shares of XYZ at the price of 50.25 per share.”

Thank you.

Okay, that was a simple straight buy using a market order with a conventional brokerage. You now have in your account the 100 shares of XYZ and they cost you 50.25 per or 5025 dollars for all of them. Now let us further assume Uncle Ralph was correct and all day XYZ rises. The next day it is up to 52. You decide to sell and take your profit. It would go like this (broker’s comments in italicized type):

(Same account number info)

“Yes Mrs. Jones, how can I help you?”

I have 100 shares of XYZ and would like to sell them. What is the current bid?

“Lets see… they are going for 52.00 by 52.75″

I would like to sell them at market please.

“Alright, let me read this order. You are requesting to sell 100 shares of XYZ at market. Is that right?”

That is correct.

“Okay, your order is sent”

*NOTE: be a pest and try your darnedest to get a confirmation that you actually sold and at what price.

“Will there be anything else, Mrs. Jones?”

Yes, did I get confirmed?

“Let’s see…. Yes, you sold 100 shares of XYZ at $52.00.”

Thank you.

In this instance, you just made a great trade! You bought 100 shares of XYZ for 50.25 and sold them all for $52. That is a profit of 1.75 per share, or 175 dollars for a two-day trade! Good job! They don’t always work that way, but if the majority of them do, you are on the road to riches.

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