A step-by-step guide on how to Buy and Sell Stocks on E*trade!
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In today’s video we will be going over How to Buy and Sell Stocks on E*trade and Power E*trade Platform.
Stocks and ETFs
Starting with the Stocks and ETFs, the first thing you need to do is track down the asset you want to buy. Let’s say APPLE for example. Type in the name of the company and pick the symbol.
You can see the last price, the bid price, which is the price that people are willing to buy the stock and open orders are waiting in there, about 500 shares on that price, and the ask price which is the shares that are on sale, currently 500 shares are on sale from 145.43.
To buy the stock you will need to head to action and select buy, pick the quantity lets say 10 shares. If you are not sure how much you can buy with you available balance click calculate, lets say you have 1000$, you can buy up to 6.88 shares., and since you can buy partial shares if you click enter you will get 6.
The next steps is to select the price type , you can pick market, which will basically will go after the ask price and buy the ask prize, that of 145.43, or you can select market at close, which will execute the order as close as possible to the close of regular session trading for that stock, that is close to 4PM EST, and you will not be able to know the price.
You have the option to put a limit order which to be honest I use quite often. A limit order allows you to enter a price you willing to buy or sell a stock. For example the price of apple is at 145.42 at the moment but I want to buy it at 140. That is the price I like, or that is the price that I am comfortable paying, I will enter 140 and I will press preview order and then palace order. The duration of the order was set at Good for the day, which means that if the price of apple falls to 140 by the end of the day I will purchase 6 stocks, if not the order will be canceled.
You can apply the same principle when you want to sell a stock or an asset. I like this option as you don’t have to be all day behind the screen looking at charts. You can change the good for the day to good for 60 days until certain date, immediate or cancel which you know what that means, and fill or kill, extended hours which is the pre market and after market hours 7am EST to 8PM EST and last extended hours Immediate or cancel. There are a plethora of options to place orders in Etrade.
The other options are Stop on quote, Select Stop on quote which means that you can buy or sell a stock when its market price reaches a specified stop price. When the stocks market price reaches the stop price, the order is triggered and turns into a market order.
The Select Stop limit on quote options allows you to buy or sell a security when its market price reaches a specified stop price. When the security’s market price reaches the stop price, the order is triggered and turns into a limit order.
The Select Trailing stop allows you to buy or sell a security when its market price reaches a trailing stop price. The trailing stop price is initially specified in terms of points above or below a security’s market price. The trailing stop price is automatically adjusted as the market fluctuates.
And last the Select Trailing stop % allows you to buy or sell a security when its market price reaches a trailing stop price. The trailing stop price is initially specified in terms of percentage (stop value %) above or below a security’s market price. The trailing stop price is automatically adjusted as the market fluctuates.
Definitely a lot of options to choose from, I prefer the Limit order and the market one when I am in for the long term and I don’t mind if I buy a stock a few dollars more.
Anyhow once ready click preview order, and then place order. This was the 75th order in this account, as I mentioned above I am not trading as much, and in order to change or cancel the order you can click on the left side of the bar.
I have no interest in buying apple even for 140 so I will cancel my order. There it is, the order was canceled.
When it comes to Power E*trade
The next tab its called options and as you can imagine it will allow you to place put and call options.
For those not familiar a A call option gives the holder the right, but not the obligation, to buy the underlying security at the strike price on or before expiration. A call option will therefore become more valuable as the underlying security rises in price.
On the other hand a put gives the holder the right, but not the obligation, to sell the underlying stock at the strike price on or before expiration. A long put, therefore, is a short position in the underlying security, since the put gains value as the underlying price falls
I will probably need to create an entire video on options and how to trade them and get into way more details, but to keep this simple you pick a symbol , we will use apple once more, and then on the right side you have some calls and some puts options.
Let’s assume we want to buy a put options on apple since we believe that the price will go lower. If we thought that the price will rise we would buy a call options.
Anyway pick a strategy, put, and then leave the action on buy open.
Currently the quantity is 1, but keep in mind that 1 contract is equivalent to 100 shares, so if the stock declines by 1$ you will be making 100$, and for each time the stock declines a dollar you make $100.
Next you need to select the expiration date , you get weekly and monthly dates here, if you see the w next to it it’s a weekly option. I will pick Jan 20 of 2023.
The strike price is a fixed price at which you can buy or sell the option, in case of a call or put. For this current order the strike price is 145.
That means that I have the right to Sell Apple Stock between now and January 20 of 2023 at the price of 145. Since I set a put I expect that the price of Apple Share will decline. If Apple shares goes to 120$ fro example I have the option to sell 100 shares for 145$ each making a profit of 25$ per share or 2500$.
To be able to do that I have to pay around 10.30 ents per share, so the actuall price to pay for this order will be around 1030$. That is the max amount of money that I will be risking here, if the price of Apple does not decrease but increases and by January 20 of 2023 is higher than 145 you basically loose.
Now majority does not exercise their right to buy the 100 shares but they sell the options as the date gets closer, especially if the price goes to their way. What costs today 1030 for 1 Put , it could cost way more tomorrow.
And since one day passed lets see what a put at 145 costs today that Apple price is on a decline.
Well today and with the Apple share to be trading at 141.67 the price of 1 put options is at 11.90 or 1190 a difference of 160$ which is about 14-15%, and that only with a decline of 2.59% in the stock price.
Meaning if we had bought the put yesterday today we could sell with a nice profit.
I hope you understand what it means to trade options. I will talk more on this video about options trading on the Power Etrade trading platform.
Anyhow, Now you have the bid and ask price which we encountered prior, bid is the price someone is willing to buy this option and ask is the price that someone is willing to sell the options. Currently there is a 10 cents gap, so if you want to buy that put order you can either put a bid price 11.95 and wait since you will be the first in line or buy the 12.00 that is available. I always suggest you put it a bit above bid price and wait, a few cents can add up down the road.
For that reason you can pick limit 11.95 and wait until you get filled, you can put it higher that 11.95 but below the 12
To buy 1 sell option of apple with a strike price of 145 and at a price of 11.95 per share we will need 1195$.
The price type that I would recommend is limit so you can control the price and the duration depends , it is entirely up to you.
But overall this is how you can trade options on Etrade.
The third tab is called Futures, and you can apply for future trading, currently I dont have a futures account as I use another broker for that, but I may apply and get that started as Etrade provides solid services and I may move my trading on this account entirely.
Next is Mutual Funds, I have created a dedicated video on Mutual Funds, their types and how to evaluate them so feel free to check the video on the channel, I will add a card and a link on the description as well.
But basically, Mutual funds are investment strategies that allow you to pool your money together with other investors to purchase a collection of stocks, bonds, or other securities that might be difficult to recreate on your own.
In E*Trade if you can either enter the symbol of a fund you want to buy or you can use advance lookup to locate trading funds.
You can choose Vanguard and you will have 132 funds to pick from, lets pick the alternative strategies one.
Click Detailed quote and then you will be presented with the information of the current Mutual Fund.
The current price of the fund is 16.76 dollars, the minimum investment is 50,000$ so it is not for everyone I would say. Etrade provides a plethora of information here, such as Ratios, Distribution Yield, Fees, Performance , Tax and Income, Risk and Rating,s and everything you need to know to make an educated decision.
What I like to look is the portofolio details, and this is one has a 37.71% os its assets on a 2 year treasury note. Overall the information provided are sufficient, to buy or sell it you can use the two buttons on the top right side.
The next option is Bonds and CBDS, once more I have created a video explaining what Bonds are and how to read and analyze them, their type and how they rank, pretty useful if you are interested in this type of investment.
E*Trade provides a catalog of Bonds and CDS with their rates, but as you can see US Treasury , Corporate and Municipal Bonds, given the market conditions many consider them a safe heaven, they are again considered safer especially the government bonds like US treasury, and their rating are spiking given the inflation we suffer as of late. The 10 year US treasury is above 4% and you can see that certain corporate and municipal bonds are paying up to 5 or more percent per year.
You have the option to pick between corporate and Munucipal bonds as well as to click Advanced Screener, and pick your ideal rates and click search.
Moving forward you have the conditional order which as you can understand it will happen if something else happens first. For example if the triple Qs price is less or equal to 270$ then go ahead and buy 100 apple shares at current market price.
Usually you want to do that with correlated companies or what I did above is I combined the triple Qs which is a reflection of the 100 top Nasdaq stocks, which Apple is a part of, and usually when one declines the other follows, so it could be oil and an energy stock or something related, an ETF sector with a stock and so on. A good option to have , I have not used it much myself , perhaps ,many people will find it useful or they already do.
Automatic Investing as the tile suggests you just add funds and they investing is done automatically. Basically you will choose certain ETFs , Mutual funds or Portfolios and you will keep adding funds there . It is the simplest form of investing, ideal for many new investors that have not the proper knowledge or understanding of the market.
Two more stops before we get to the Power E*Trade platform which we will spend a considerable time on it, as if you want to trade a bit serious in the market you need to know how to use it.
So on the trading tab we have the IPOs and Other new Issues, which basically will inform you if there is a new IPO offered through E*Trade of a new Bonds, CD or ETF entered the market. I always fancy IPOs but as explained on a previous video they are extremely high risk, that is why you need to preform due diligent prior investing in them.
Last, the cryptocurrency tab which obviously I have not opened an account, and I say obviously because if you ever traded Crypto you know that there are very good options on other platforms such as Coinbase, Kraken, Gemini, FTX and so many others that specialize in crypto trading and offer way more options than E*Trade. Plus I prefer keeping my cryptos on my own wallets and not on exchanges.