Buying and Selling Stocks for Beginners | The Basics of Trading | Rob Armbruster | Skillshare

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Buying and Selling Stocks for Beginners | The Basics of Trading

teacher avatar Rob Armbruster, Investing and Personal Finance

Watch this class and thousands more

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Taught by industry leaders & working professionals
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Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

8 Lessons (22m)
    • 1. Introduction

      1:09
    • 2. Finding the Right Broker

      4:09
    • 3. Basic Order Types

      3:27
    • 4. Advanced Order Types

      3:25
    • 5. Earnings Report Limit Order Strategy

      2:42
    • 6. Trading Terminology Part 1

      2:17
    • 7. Trading Terminology Part 2 (Dividends)

      2:17
    • 8. Next Steps

      2:21
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About This Class

When I started investing for myself I honestly felt intimidated because it seemed like a foreign language to me. I opened up my account and had a dashboard of tools that I didn't know how to use. This class will teach you how to trade and get the most out of your investment dashboard. I'll define the common terms that you see, and show you how to use different trade types to your advantage.

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This lesson is not considered licensed financial advice. It is purely for educational purposes to help you to manage your own investments. Future trades that you make are done at your discretion.

Meet Your Teacher

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Rob Armbruster

Investing and Personal Finance

Teacher

When I was 24 years old I was sitting in an office with a financial advisor. After he showed me the fees associated with him investing my money, I left the meeting feeling uncomfortable with his proposition. This is how my investing journey started. I began to research how to successfully manage my own investments and found that it was easier than I thought. Today, I'd like to pass on what I have learned over the past seven years of managing my finances to you. 

I have a passion to help people from every race, ethnicity, and background discover their ability to make great wealth! My classes provide the basic fundamentals of making great long-term financial decisions. Please follow this page so that you won't miss any of the great resources coming out in the future!

... See full profile

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Transcripts

1. Introduction: Welcome to buying and selling stocks for beginners. My name is Rob rooster. When I first started trading stocks and other securities, I found the terminology and all the new things to learn kind of hard to understand. So I've created this class to bring clarity and confidence as you trade and buy and sell stocks in the marketplace. I'm going to cover how to execute basic order types, how to execute advanced order types, and then share with you an earnings report order types strategy that I've developed. Then we'll go over trading terminology. I'll end the class by talking about the power of dividends. You'll come away from this class knowing how to own your buying and selling dashboard that you have better. And this is just one of many classes that I've created to help you build long-term wealth for the future. So jump on in and enjoy. 2. Finding the Right Broker: And there's a few questions that you have to ask yourself in order to find the right broker to use to buy and sell stocks. The first question to ask yourself is, do I want to open up my own online account or do I want to hire a financial advisor? This depends on how much money you're looking to invest into the stock market and how much interest you have in following the markets, making purchase decisions and things like that. Here's what I would say for this situation. If you have over a $100 thousand and you don't have very much interest in following the stock market or ETFs or things like that, then I would recommend hiring a financial advisor. And what they're gonna do for you is they'll pick the right investments. You can kind of just sit back and they'll do all the work for you. And they'll make sure that your investments are in the right places and move them around if an adjustment needs to happen. However, for those of you who have an interest in the stock market, and you might have under a $100 thousand or even over a $100 thousand, I would recommend opening up your own online stock account. They're free to open, and most platforms offer free trading for you. An example of this would be my sister. She actually came into a settlement of over $200 thousand and she had just gotten out of college. She actually chose to use a financial advisor to manage her investments. She didn't have very much interest in the markets and she had just kind of got this money. So that would be a situation where okay. I want to hire somebody, but for a lot of us out there, it's just the money that we've saved and came up with that we have to invest. The other question to ask yourself is, what do I want to trade? There's a variety of different investments that you can trade in markets today. There's stocks, ETF's, and bonds. And so I would recommend choosing a platform that contains the investments that you would like to invest in. Another question to ask yourself is how active I'm not going to be with my investments. Am I going to be more like a day trader? Is this going to be something that I devote time and energy to making more than five trades a day, I would say would classify you as a day trader or are you going to be more like a normal person where you make less than three trades a day. If you're looking at becoming a day trader, I would recommend getting a direct access broker and they'll be able to come up with an agreement for you for a high volume of trades. But for what I call more normal people, I would say getting a regular broker such as Fidelity, Vanguard, Scott trade, something like that. And we'll be just fine for what you want to use it for. Just a note on this. For those of you who are, who are living international, you can invest too. And there's a couple of platforms that I would recommend for that the first one is called interactive brokers. And this is the number one broker for international markets. It covers pretty much all markets that you can think of. The number two broker for international markets is fidelity. Fidelity allows you to trade in 25 different countries and 16 different markets. So that's another option for you. They're in the classroom resources. I have linked different brokers websites for you to be able to click and checkout. In this next lesson, I'm going to teach you how to use basic order types. 3. Basic Order Types: Alright, so now I'm going to teach you the basic order types. The first and most common order that you can make is what's called a market order. As you navigate to purchase a stock, it's gonna say, Would you like to buy or sell this stock? And you'll click buy. If you want to purchase the stock at its current market price, you would do what's called a market order. Basically, it takes the next quoted price of the stock within the market and purchases the stock at that price with a market order you're saying, I want in right now with this stuck, the other type of basic order that you can do in the stock market is what's called a limit order. In essence, a limit order says, I want in, but only at this price. So when you set your limit order, you can choose to buy a stock well, only if it hits a certain price. Now, the risk with this is it only executes the trade if the stock goes low enough to that price. So for example, say General Motors company is selling at $30, I set a limit order for $29.50. That trade will only be executed if GM hits, hits that 2950. But say in a situation, the price of GM increases to $40 and then $50 over the next years than the trade that I'm wanting to do never gets executed. However, one strategy that I use with limit orders, purchasing stocks, say GM, is trading at $30 per share. I'll put a limit order at $29.90 per share. And I can be fairly confident that through the next week or in the near term, that trade is gonna go through. Because all I need to do is have the stock price decrease to that much. Now limit orders also work on the other end of things. So if you're selling a stock, you can say, I only want to sell this stock if it hits this price, you can set your limit order for that price. So keeping with the same example, you buy GM stock at $30 per share. You say, I want to sell it. If it hits $45 per share, you can put in your limit order into the system. It won't be executed. You won't sell the stock right away. When the price hits $45 per share, then your limit order will be executed and you'll sell the stock. It's a great tool for not having to always track what you're wanting to do in terms of buying and selling. And you can just set what the limits are and let the stocks go. And it's nice because I've had times where I set my limit order and then my phone texts me, you know, I haven't done anything in my phone. Text me and it's like I bought the stock for the price that I wanted. In the next section, I'm going to go over advanced order types. So stay tuned for that. 4. Advanced Order Types: Alright, so now I'm gonna teach you about advanced order types. And before I get into this, I want to save this. I don't use these order types a lot. When I'm trading. They're a little bit higher risk than a market order or a simple limit order. But there are some opportunities that I've taken in the past using the strategies that are available with these advanced order types. I want you to get to know him and then you can choose if and how much you would like to use them. The first one is what's called a stop loss order. And this is an ordered designed to be able to limit your risk of great loss with a stock, you can set your stop loss price below the market price. What the order will do is it will stay there and it won't fulfill until the stock goes down to the stop loss price that you've set for it, it will become a market order and sell the stock at that price. If something really bad happens with the company, it prevents you from even greater losses, which is nice. The next type of advanced order type that you can use is what's called a buy stop order. No, a buy stop order sets a price above the market price for a stock that you don't own yet, but would like to own if the market price goes up, you set your market price, say 10% above market value. You will only buy the stock if that price reaches above the market value that you've set. This is great for stocks that fluctuate. You know, if there's an upward fluctuation that it's going to keep heading that direction. Then this is a great order to put in for your stock. The third advanced order type that I'm gonna go over in this class is what's called a trailing stop order. So if we look here at this graph, this gives a great example of how a trailing stop order works. So say you buy stock at $25 per share and it goes up to $27 per share. And you want to set the strategy for when you're going to sell the stock. In this situation, the trader sets the trailing stop loss with a trail value of $1. Now you can set this trail value to be $1. You can set it to be 10% or whatever you would like. As long as the price moves upward, the stock isn't going to sell until that price hits its peak and then starts going down is when the trail price comes into play. So you can see here on this graph, the trail price is $1 less than the maximum price. It goes up to $29. And then when it goes down to $28, the order automatically executes and sells the stock at $28. I hope you enjoyed these advanced order types. If you have any questions, feel free to put them in the comments. In this next lesson, I'll be showing you a strategy that I use when companies come out with their earning reports. 5. Earnings Report Limit Order Strategy: So now I'm going to teach you the earnings report limit order strategy. But before I get into this, I do want to also say that this strategy doesn't work all the time and there are risks associated with it. I'm not even going to include this on the homework. I'm just going to share about it. I'm not a licensed financial advisor, but I am somebody with experienced trading in the markets that is just looking to empower you to be able to make certain trades and use different strategies as you want to use them. When a company releases its earnings report every quarter, if it hits its projected earnings than it usually, the stock might go up a little bit or it might stay even if it exceeds their projected earnings. So the company has earned more money than we expected them to earn. Then oftentimes the stock price will take a jump. People are like, oh, what's going on with this company? They're, you know, they're doing something right? If it under, achieves when it comes to earning almost all the time, the stock price will decrease. You know, these, these reports come out in the news and they're reported. There's pretty fast fluctuations based on earnings on the day after the report is given, what I do is I'm not betting on the price going up. I'm not betting on the price going down, but there is a way to bet the price fluctuating, which often happens during earnings reports. So what I'll do is I'll set a buy limit order below the stock price. And then I'll also set a buy stop order above the stock price. Now what this will do is if the order report comes in favorable, it will buy the stock above the price. If it comes in unfavorable, I can buy the stock at a lower price, knowing that it will probably recover in the future. This will be a short-term investments so that then I'll sell it within a week or something like that. It's just a great way of being able to use the strategy. I would say that a risk with this strategy is if you set a sell stop order, you might end up buying the stock at that lower price. But who's to say the stock price will increase from there? I just want you to be aware of that, but it is something that I've done in the past. So there you go. You can use it at your own risk. In this next section, going to talk to you about trading terminology. 6. Trading Terminology Part 1: Alright, in this lesson, I'm going to teach you some terminology that you'll have to know for trading stocks in the stock market. The first term that I want you to know is the term Good Til Cancel. So when you place an order to buy or sell a stock and it's anything besides a market order, it will give you the option of saying, do you want this order to be good til canceled or this order to be good til the end of the day. What good til canceled says is we're going to put this limit order n. We will execute it at this price that you're looking for until you tell us not to will be an outstanding order in your account until you cancel it. The other term is good til the end of the day. So say you see the movement of the price of a stock and you'd like to get in on it, you're not entirely sure that you want to commit to it for a long period of time with your limit order, you can set it to be good til the end of the market day. And what that will do is at the end of the day, if the order isn't executed, it will disappear. You won't have to think about it anymore. The other term that I want you to be familiar with is fractional shares on the Robin Hood platform and a variety of other platforms. They're opening the opportunity for you not to buy an entire share of stock, but actually to by a fraction of a share of stock. This has happened because Amazon costs thousands of dollars. You know, Google costs over a $1000 to buy. Some people don't have that kind of money to even buy a single share. What fractional shares does is it lets you set the dollar amount that you want to invest towards accompany less than a share. So a couple of weeks ago, I wanted to get in Apple stock, but I didn't want to pay around $400 to buy a share of Apple stock. And so what I did was I bought a fraction share that you can sell the fraction of the share two. And in the next lesson, I'm going to continue talking about terminology and define what a dividend is and how it affects your stock. 7. Trading Terminology Part 2 (Dividends): Alright, so now I'm going to teach you what a dividend is and how to find the dividend yield for your investment. But dividend is basically a thank you note for owning shares in a company. What the company is saying is, thank you for investing in us, thank you for investing in the stock. And they're not just saying it, but they're backing that up with a quarterly distribution of Money. Picture receiving a card in the mail from grandma with money in it. It's kind of like that. Only. It's a card from a company saying a thank you. We want the Thank you to be more than words. And so they send this distribution most of the time for stocks, it happens on a quarterly basis, every three months based on the profit that the company earns, they'll have a distribution of dividends to each investor per the shares of stock that they purchase. The cool thing about this is, say, a dividend is $2 per share of stock. That might not seem like a lot. You know, say you own 30 shares of the stock, then that money starts to add. I've actually heard of people, they've invested so well over the years that they can live off of the dividends that they're receiving for their stocks, which is pretty awesome. So what is the dividend yield? You'll see this as you're investing. Basically the dividend yield is the total amount of dividends given to you per year divided by the price per share multiplied by a 100. For example, if General Motors pays $2 in dividends per year by would take $2 and divide it by the current stock price. So if their stock price is $30 and divide that out, I would get 0.066. Then I would multiply that by a 100 and get 6.6%. That's a really great dividend yield to receive for a stock. In this next lesson, I'm going to share with you what to do with what you've just learned in this class. 8. Next Steps: Here's some things that you can do to get the most out of what you've learned in this class, I've created a homework assignment for you to do based on what you've learned in this class. I'm not going to ask you to use any of the advanced order types because they are higher risk. What I'd like you to do is buy a stock using the limit order strategy. So set a limit order for slightly below the stock price. Experiment with buying when that price dips down a little bit below. And buying a stock that you know is a good company that will go up in the future. I'll have some questions. How did it work out for you? And so complete that assignment and then post what you found back here on skill share. The other thing that I would like for you to do is to leave a review for this class. Let me know what you learned, what you liked about the class. And then if there's anything I can improve on, also let me know about it's a great resource for future students to know the class that they're taking when they're looking at it. And then lastly, I would like to refer you to some other classes that I've created for you. And I just have an incredible passion for helping people of all races, all classes, and all incomes be able to build wealth for their future. There's a variety of different classes. The places that I'd recommend going after this class checkout, my class, investing in a recession. This class is specifically designed to teach you how to find great companies regardless of whether the market's going up or down and how to successfully invest in those. The other class I'd like to recommend is the stock market for beginners class. And that will go more into the strategy of how to research a company and make that buying and selling decision based on what's happening within the company. Especially if there's been parts of this lesson that have been kind of above your understanding. I would also very highly recommend taking the stock market for beginners class. Thanks so much for tuning in, and I'll see you in the next class.