How to Buy Stock on TD Ameritrade: A Seasoned Investor’s Guide

Buying stock on TD Ameritrade is a straightforward process designed for both novice and experienced investors. After opening and funding your account, you can buy stocks through their website, mobile app, or over the phone. Simply search for the stock ticker symbol, enter the number of shares you want to purchase, select your order type (market, limit, etc.), and review and confirm your order. Let’s delve into the specifics of each step to empower you with the knowledge to navigate TD Ameritrade’s platform with confidence.

Setting Up Your Account: The Foundation for Investing

Before you can trade, you’ll need a TD Ameritrade account. This is your gateway to the stock market and understanding the different account types is paramount.

Opening a TD Ameritrade Account

The initial step involves visiting the TD Ameritrade website and initiating the account opening process. You’ll be prompted to choose an account type. Taxable brokerage accounts are the most common, allowing you to trade stocks, ETFs, and other securities, but your gains will be subject to capital gains taxes. Retirement accounts like Traditional or Roth IRAs offer tax advantages for long-term investing. Choose the account that best aligns with your financial goals.

Funding Your Account

Once your account is approved, it’s time to add funds. TD Ameritrade provides several options for funding your account, including electronic bank transfers (ACH), wire transfers, and checks. ACH transfers are typically the most convenient and cost-effective method. The time it takes for funds to become available for trading can vary depending on the method used; ACH transfers usually take 1-3 business days.

Executing Your Trade: A Step-by-Step Breakdown

Now comes the exciting part: actually buying the stock! TD Ameritrade provides a user-friendly interface on both its website and mobile app.

Finding Your Stock

The first step is to locate the stock you wish to purchase. Use the search bar at the top of the website or mobile app and enter the stock’s ticker symbol. For example, if you want to buy Apple stock, you would enter “AAPL.” This will pull up detailed information about the stock, including its current price, trading volume, and historical performance.

Placing Your Order

Once you’ve found the stock, it’s time to place your order. Click on the “Trade” button (or a similar button depending on the platform version). This will bring up the order entry screen.

• Action: Select “Buy.”
• Quantity: Enter the number of shares you want to purchase.
• Order Type: This is crucial. A market order executes your trade immediately at the best available price. This is the simplest and fastest option but offers less price control. A limit order allows you to specify the maximum price you’re willing to pay. Your order will only execute if the stock price drops to or below your limit price. A stop-loss order is designed to limit potential losses by selling your stock if it falls to a specific price.
• Time in Force: This determines how long your order remains active. “Day” means the order is only good for the current trading day. “Good ‘Til Canceled” (GTC) means the order remains active until it’s filled or you cancel it (often with a maximum duration).
• Route: Leave this setting at the default unless you have specific routing preferences (which is generally not necessary for most retail investors).

Reviewing and Confirming Your Order

Before submitting your order, carefully review all the details to ensure they are correct. Pay particular attention to the stock ticker, quantity, order type, and estimated cost. Once you’re satisfied, click the “Review Order” (or similar) button. A final confirmation screen will appear. If everything looks good, click “Place Order” to submit your trade.

Understanding Order Types: Market vs. Limit

Choosing the right order type is critical to managing your risk and potentially improving your execution price.

Market Orders

As mentioned earlier, market orders prioritize speed of execution. They are filled immediately at the best available price. This is suitable when you want to buy or sell a stock quickly and are less concerned about getting the absolute best price. However, be aware that in volatile markets, the price you pay may be different from the price you saw when you placed the order.

Limit Orders

Limit orders give you more control over the price you pay or receive. You specify the maximum price you’re willing to pay when buying or the minimum price you’re willing to accept when selling. Your order will only be executed if the market reaches your specified price. This can be beneficial for avoiding paying too much for a stock or selling too low. However, there’s a risk that your order may not be filled if the market doesn’t reach your price target.

Monitoring Your Investments: Keeping a Close Eye on Your Portfolio

After buying your stock, it’s essential to monitor its performance and your overall portfolio.

Tracking Your Portfolio

TD Ameritrade provides a comprehensive platform for tracking your investments. You can view your portfolio’s current value, performance over time, and individual stock holdings. Regularly review your portfolio to ensure it aligns with your investment goals and risk tolerance.

Setting Price Alerts

TD Ameritrade allows you to set price alerts for specific stocks. You can receive notifications when a stock reaches a certain price, either above or below its current level. This can be helpful for identifying potential buying or selling opportunities or for simply staying informed about market movements.

FAQs: Your Burning Questions Answered

Here are some frequently asked questions about buying stocks on TD Ameritrade, designed to further clarify the process.

1. What are the fees associated with buying stocks on TD Ameritrade?

TD Ameritrade charges $0 commission for online stock trades. However, there may be fees associated with certain types of orders or account services, such as broker-assisted trades or margin interest. Always review their fee schedule for the most up-to-date information.

2. What is a margin account, and should I use it?

A margin account allows you to borrow money from TD Ameritrade to purchase stocks. While this can amplify your potential returns, it also increases your risk and potential losses. Margin investing is not suitable for all investors and should only be considered if you have a thorough understanding of the risks involved.

3. How much money do I need to start investing on TD Ameritrade?

There is no minimum deposit required to open a standard brokerage account on TD Ameritrade. However, some account types, such as margin accounts, may have minimum balance requirements. You’ll need enough money to purchase at least one share of the stock you want to buy.

4. Can I buy fractional shares on TD Ameritrade?

Yes, TD Ameritrade offers fractional share trading. This allows you to buy a portion of a share, making it easier to invest in high-priced stocks even with a smaller budget.

5. How do I sell stock on TD Ameritrade?

The process for selling stock is similar to buying. Go to the “Trade” section, select “Sell,” enter the ticker symbol, the number of shares you want to sell, and choose your order type. Review and confirm your order before submitting.

6. What is the difference between a stock and an ETF?

A stock represents ownership in a single company, while an ETF (Exchange Traded Fund) is a basket of stocks or other assets that tracks a specific index, sector, or investment strategy. ETFs offer diversification and can be a simpler way to invest in a broader market.

7. How do I research stocks on TD Ameritrade?

TD Ameritrade provides a wealth of research tools and resources, including stock screeners, analyst reports, and company profiles. Use these tools to conduct thorough research before investing in any stock.

8. What are the tax implications of buying and selling stocks?

When you sell stock at a profit, you may be subject to capital gains taxes. The tax rate depends on how long you held the stock (short-term vs. long-term) and your overall income tax bracket. Consult with a tax advisor for personalized guidance.

9. How do I transfer an existing brokerage account to TD Ameritrade?

TD Ameritrade offers a streamlined process for transferring assets from another brokerage account. You’ll need to complete a transfer form and provide information about your existing account.

10. What is the Thinkorswim platform?

Thinkorswim is TD Ameritrade’s advanced trading platform designed for active traders. It offers sophisticated charting tools, technical analysis indicators, and options trading capabilities.

11. How do I contact TD Ameritrade customer support?

TD Ameritrade offers customer support via phone, email, and online chat. Their website provides contact information and hours of operation.

12. Is TD Ameritrade a safe platform for investing?

TD Ameritrade is a reputable and well-established brokerage firm. It is regulated by the Securities and Exchange Commission (SEC) and is a member of the Securities Investor Protection Corporation (SIPC), which protects investors up to a certain amount in the event of a brokerage firm’s failure. However, SIPC does not protect against market losses.

By understanding these steps and FAQs, you’ll be well-equipped to navigate the TD Ameritrade platform and make informed investment decisions. Remember, investing involves risk, and it’s essential to do your research and consult with a financial advisor if needed. Happy investing!