How To Buy Stocks For Beginners 📈 OPENING A TRADING ACCOUNT #Best Education Page #Online Earning

- How's it going today guys?

So I have another video here,

and this is actually something that one of you guys

who watch my channel sent me a question

and wanted to me 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 never would have 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.

If you guys have any other questions

that you want me to answer,

send me a message on YouTube.

Probably the best way to get ahold of me is on Twitter

because I'm most active on that.

Send your message there

and if you have something you want to be covered in a video,

I'll try to work it in somewhere

to explain things to you guys better.

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

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,

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 shit, I better sell 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 it.

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 market is down and you have no choice,

you need the 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,

they mostly use these online discount brokers.

I mean, there are some people

who have a live stock broker.

You know, you go call them up on the phone

and make your trades,

but for the most part 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,

somebody you 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 gonna use an online discount broker.

These are 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, an Scottrade.

For me, I use Scottrade

because what I was looking for was 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 guys.

You want to do your research with these.

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 that somebody was depositing 50,000 dollars

and then there's somebody else depositing 2,000 dollars.

There's gonna be different advantages to these brokers,

so you're gonna want to do your research with that.

For me, I chose Scottrade because they had a low trading fee

of seven dollars a trade and they may,

I don't know if they're 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 while now, so I'd be surprised if they changed 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 gonna 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

and just compare all of them

so you don't have to combing 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 wanna be in that situation guys,

trust me.

Your second step is to decide on an online discount broker.

And 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 on to your computer and sell

or pick up your phone, call your stock broker,

tell him "hey, sell this"

and then he gets on his computer and sells?

It just adds steps to the process and for the most part,

human stock brokers are a lot more expensive.

So you don't want to be paying 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, I was all excited about trading.

I was like, ready to rock and roll,

and it was like, pump the brakes man,

we gotta 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,

send in a copy of, I may have, don't quote me on this,

but I may have sent in my birth certificate too.

They needed some serious information from 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 a 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 trading,

that's where you kind of choose what your strategy is.

If you're speculative, if you're investing in futures,

they kind of just want to know what type

of investing 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 on a stock,

you're going to pay taxes on that at the end of the year.

That's why they need to have your tax ID

or your social security number,

in order to send that over to the IRS

to make sure that they get their fair share of that money.

Okay, so that, keep in mind, can be anywhere from,

I don't know, a week to maybe even a month.

I know mine took at least two weeks as far as I remember.

So plan on this step here

taking you 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.

Alright your first step

is going to be transferring your funds.

The way I do it is just through my checking account.

So when I set up my trading account,

I just did my account number and my routing number

and then I think after three days or so,

that was active and I could send money in or request money,

but you can also, if you want to, do a check.

You can mail a check in

or you can do a Western Union cash transfer.

I have a mutual fund 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 of different ways

you can transfer funds into your account.

So then step number five.

This is when you have opened your account,

you have money in there ready to go.

Your fifth step, five and six, are very important.

I'm gonna explain why.

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 eBook

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 which ones would be best for you.

There's other resources available too.

I'm sure any stock market broker,

any stock broker I mean,

any online discount broker,

they're gonna have 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 commission of the trades.

So that's step five

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 late orders, trailing stops,

it gets very confusing.

There's a lot to it, so you really wanna know

what you're doing with that.

And then step number six, very important step.

Familiarize yourself with the trading platform.

You don't want to be ready to sell your stock.

This is like "Okay, yeah, I've 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.

Another pointer too, 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 from my smartphone,

which is cool.

So it's not a bad idea to have that app as well

if you wanna log on quick

and do your trades from wherever you are,

if you're not gonna 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.

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,

it's like a cash pool

and they will basically give you a small interest rate

or dividend in exchange for you having your cash there.

So that way you may be,

you might want to consider,

if you're gonna have that cash sitting 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 too, when you're making your account,

this is very very important.

If you wanna 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 margin account,

your stock broker is giving you a loan

on the funds that you've put in,

so it's possible that you may put in 10,000 dollars

and then you're gonna get a loan of 10,000 dollars

in the margin account.

So your buying power is actually 20,000 at that point.

However, 10,000 is a loan.

For the most part, I'm gonna say like 99.9 percent

of beginning traders.

Don't do this.

This is a good way to really lose a lot of money

and end up in a debt.

Here's a major problem with a margin account.

There's something called a margin call

and every stock broker 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 fall in value,

they'll sell off shares of a completely different stock

to cover that loss.

Not something the average investor

wants to be involved with, not gonna lie.

That would scare the crap out of me.

That's why I would recommend the cash account

to pretty much everyone.

I'm gonna say that right now.

I don't even know any beginner

that I would recommend a margin account to.

I don't mess around with margin accounts.

I don't think I ever will to be honest with you.

But that's pretty much it guys.

That's your steps to opening a trading account.

Like I said, Scottrade is the platform that I use

and I know a lot of people who use these other ones too.

I just want to throw out there too,

I'm not like getting paid by Scottrade or anything

to mention them in this video.

I just like to be transparent about exactly what I'm doing

because 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.

I've been able to make consistent profits

every week trading stocks

and I only spend about an hour or two a week doing it,

so it's a nice little income source for me

and 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 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'd be happy to do that.

Thank you guys for watching.

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