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Use the information and resources below to learn the trading fundamentals on how to invest in stocks. If you have questions along the way, contact a specialist for help.

Understanding the Basics

A stock is like a small part of a company. Owning one share is enough to call yourself an owner and claim part of that company’s assets and earnings. Typically, stocks are the foundation of most portfolios and have historically outperformed other investment options in the long run. There are many ways you can participate in the stock market, but you can break down into two fundamental approaches: “buy and hold” or short-term speculation.

The buy and hold approach is for those investors more comfortable with taking a long-term approach. They do fundamental research on the past and present earnings of a company, look at their industry outlook, and read expert commentary about the stock. The goal is to find and invest in quality stocks that are going to provide a return or dividend for the long haul. Therefore the buy and hold investor is less concerned about day-to-day price movement.

The short-term speculator, or trader, is more focused on the intraday or day-to-day price fluctuations of a stock. They often take a more technical approach, looking at charts and statistics that may provide some insight on the direction the stock may be heading. The goal is to buy low and sell high for a profit quickly. They may also participate in “shorting” a stock, which allows them to sell a stock they don’t actually own. This strategy is used when a trader thinks a stock will decline in price, allowing them to profit from a down market. Shorting a position can lead to theoretical unlimited risk if the security rises in market value.

These two general approaches are just a basic sampling of how stocks can be used as either a long-term investment, or a short-term speculative tool. How you decide to invest and trade in stock should depend squarely on your goals and risk tolerance.

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Stock Trading

Some things to consider before investing in and trading stocks:

Liquidity: Stocks are one of the most heavily-traded markets in the world, with numerous physical and electronic exchanges designed to ensure fast and seamless transactions. Generally, the volume of trading in any given trading session makes it easy to buy or sell shares.

Choice: There are an enormous amount of stocks to choose from. For example, there is a wide variety of industries represented in stock, as well as shares from companies of differing sizes. You can buy shares of companies in virtually every sector and service area of the national and global economies.

Access: It’s easier than ever to trade stocks nowadays. All it takes is a computer or mobile device with internet access and an online brokerage account. With a TD Ameritrade account, you have access to Trade Architect or the more advanced thinkorswim trading platform, as well as useful research and stock selection and screening tools.

Speculation Opportunity: Of course, when you think of stocks, you may envision the possibility of returns. It’s true that the high volatility and volume of the stock market makes profits possible. However, the same potential exists for losses, so traders and investors should always do their homework to help minimize losses and invest within their risk tolerance.

Low Commissions: The commissions for trading stocks are very affordable, particularly if you’re willing to participate in efficient online trading. At TD Ameritrade, online trades are only $9.99 per Internet equity order, regardless of the price of the security or the number of shares you trade.

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Setting Up Your Account

You can trade and invest in stocks at TD Ameritrade with many different account types. If you intend to take a short position in stocks, you will also need to complete apply for, and be approved for, margin privileges in your account.

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Choosing a Trading Platform

There's one factor that stands well above the rest when choosing your trading platform, and that's you. From your investment strategy and frequency of trades to things as simple as your preferences, TD Ameritrade offers a number of ways to trade the way you want:

Choose a platform that fits your stock strategy

Web Platform - Our simple, yet comprehensive web platform lets you do it all so that as you explore different investment products you won’t have to learn new software.

Trade Architect - From robust tools to independent research, give yourself an intuitive web-based trading experience with no subscription fees, platform fees, or trade minimums.

thinkorswim - With elite tools and insight generation supported by professional-level technology, you’ll be able to trade more confidently.

Mobile Trading - Manage accounts, trade stocks and generate ideas with real-time connectivity on your mobile device or smartphone anytime, anywhere.

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Developing Your Strategy

Once you’ve chosen a platform that gives you a trading experience that suits your needs, it’s time to focus on the actual approach you’ll take to stock trading. To avoid letting the ever-evolving market take you by surprise, you’ll need access to the latest news, trends and analysis.

Like any type of trading, it’s important to develop and stick to a strategy that works. Stock traders tend to build a strategy based on either technical or fundamental analysis. Technical analysis is focused on statistics generated by market activity, such as past prices, volume, and many other variables. Charting and other similar technologies are used. Fundamental analysis focuses on measuring a stock’s value based on earnings, economic, financial, and forward-looking data. Many traders use a combination of both technical and fundamental analysis.

At TD Ameritrade, you’ll have tools to help you build a strategy and more. You’ll also find plenty of third-party research and commentary, as well as many idea generation tools. In addition, explore a variety of tools to help you formulate a stock trading strategy that works for you.

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ScreenersScreenersTools & CalculatorsAll
Stock, Mutual Fund, ETF, and Options screeners use the criteria you enter to find investments that may fit your strategy...
Morningstar Instant X-RayMorningstar Instant X-RayTools & Calculators
Enter ticker symbols, specify an allocation for each holding, and get instant analysis.
playInvesting Basics: StocksVideos
04:15Want to learn more about investing? The Investing Basics series provides an introduction to a variety of investing topics. In this video, we look at one of the most common investments: stocks. Learn what a stock is, why companies decide to go public, and how an investor can profit from buying stock.
playUnderstanding Investing RisksVideos
8:26All investing carries risk, and understanding this risk is important. Various asset classes are discussed.

AdChoices

Market volatility, volume and system availability may delay account access and trade executions.

Educational resources are provided for general information purposes only and should not be considered an individualized recommendation or advice.

TD Ameritrade does not charge platform, maintenance, or inactivity fees. Commissions, service fees, and exception fees still apply. Please review our commission schedule and rates and fees schedule for details.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

TD Ameritrade, Inc., member FINRA / SIPC / NFA. This is not an offer or solicitation in any jurisdiction where we are not authorized to do business. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2014 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.