5 Steps to Set Up and Start Buying Stocks Online

Stock investing is becoming increasingly popular in Vietnam. If you want to participate in this market but don’t know how to buy stocks, the following article will provide you with a clear roadmap with 5 basic steps to start trading safely and effectively.

Step 1: Determine the account type and choose a suitable broker

To start buying stocks, the first step is to find a reputable securities trading service provider. Currently, there are two main forms of trading:

Investment fund trading: You deposit capital into a managed fund and receive interest based on the fund’s performance. This method usually has higher management fees and requires a larger initial capital.

Brokerage trading: You open a personal account and place buy/sell orders at will. This is the method many individual investors prefer because it offers more flexibility and typically lower costs.

When choosing a broker, you should check important criteria such as: legal operating license, transaction fees, trading platform quality, and customer support. Do not rely solely on one option; compare multiple choices to find the most suitable one for your needs and budget.

Step 2: Complete the account opening process

After selecting a broker, you need to complete the account opening steps:

Register an account: Provide an email address or mobile phone number and set a secure password. This is very important to protect your account.

Verify personal information: You will need to provide details such as name, address, date of birth, and some identification documents. Additionally, you should answer some questions about your trading experience so the broker can assess your risk level.

Identity verification: This process may take from 1 to 2 working days. While waiting, you can use a demo account (practice account) to familiarize yourself with the trading interface without using real money.

A demo account is a great opportunity to test trading strategies and understand how the market works without risking any money. Once your identity is verified, you can deposit funds and start trading with real money. A tip for beginners is to start with a small amount until you feel more confident.

Step 3: Choose the type of securities to invest in

This is the most decisive step in your investment journey. You need to decide which type of securities to invest in based on your financial goals and risk tolerance.

Individual stocks of companies: You select companies you trust and buy their stocks. To do this well, you need to perform in-depth financial analysis of the companies, review their business situation, profits, and future prospects. The advantage of this form is that company stocks can appreciate faster and more strongly than mutual funds. However, it requires you to spend more time researching.

Mutual funds or ETFs (Exchange-Traded Funds): When you buy shares of a fund, you essentially own a part of many different stocks. For example, if you buy an ETF tracking the technology index, you will own a portion of leading tech companies. The main benefit is risk diversification, as you are not dependent on the success or failure of a single company.

Derivative securities (CFD, Futures, Options): These are more complex financial instruments that allow you to place orders in two directions—you can profit whether stock prices go up or down. However, they come with higher risks and are suitable for experienced investors.

Each type of security suits different investment strategies and goals. New investors should focus on individual stocks or ETFs because they are easier to understand.

Step 4: Use trading orders intelligently

How you place orders is also very important for your trading results. There are 4 main types of orders you need to understand:

Market Order (Market Order): An order to buy or sell stocks immediately at the current price. The advantage is that your order will definitely be executed, but you may not know the exact final price, especially with stocks that have rapid price fluctuations.

Limit Order (Limit Order): You specify a specific price at which you are willing to buy or sell. The order will only be executed when the market reaches that price. The advantage is that you control the price level, but the order may never be matched if the price never reaches your target.

Stop-Loss Order (Stop-Loss Order): An important protective measure. You set a price level at which, if the stock drops to that point, the order will automatically sell to cut losses. This helps limit your losses when the market moves against your prediction.

Trailing Stop-Loss (Trailing Stop-Loss): An upgraded version of stop-loss. Instead of setting a fixed price, this order’s price automatically adjusts in a favorable market trend, helping you protect profits.

For highly volatile stocks, use Limit Orders to avoid accepting undesired prices. For less volatile stocks, Market Orders may be a better choice to ensure execution.

Step 5: Build a diversified portfolio

The final step to success is never putting all your eggs in one basket. Diversifying your portfolio is a crucial strategy to minimize risk.

Invest in indices: Instead of choosing individual stocks, you can invest in indices like S&P 500 (500 largest US companies). This gives you access to a professionally managed portfolio without analyzing each company.

International investment: Don’t focus solely on one country; consider investing in different markets around the world. This protects you from economic risks of a single country.

Diversify asset classes: Don’t invest only in stocks. Consider other assets like gold, bonds, or real estate. During economic crises, these assets may increase in value while stocks decline, helping balance your portfolio.

Avoid over-concentration: Diversification does not mean investing in everything. Choose quality stocks or funds that align with your strategy.

A simple way to start is by buying ETFs or index funds, as these portfolios are pre-selected by experts. As you gain experience, you can add individual stocks to your portfolio.

In summary

Buying stocks is not a difficult task if you follow a clear plan. By following these 5 steps—selecting the right broker, opening an account, choosing suitable securities, using effective trading orders, and diversifying your portfolio—you will have a solid foundation to begin your investment journey. Remember that investing is a long-term process, so be patient, keep learning, and practicing, and buying stocks will become increasingly natural over time.