To make your savings grow, investing in the stock market is a solution. However, this is a risky bet, especially when starting out in the stock market. Follow our advice to take your first steps in this insider environment. How to buy shares on the stock market and sell them? Everything you need to know about the procedures and steps to follow: opening a securities account, choosing the financial intermediary, etc.
Start buying stocks on the stock market, how to do ?
First, before buying stocks on the stock market, you have to start by having a securities account. It is an investment medium for executing orders on the financial markets.
Thus, financial securities such as shares or bonds, Sicav, etc. must be registered in an ordinary securities account or a PEA (Plan d’Epargne en Actions). For this to be effective, you must contact a bank or an online broker. They then act as a financial intermediary.
How to choose the investment vehicle or securities account?
There is no single investment vehicle. Indeed, in the field of the stock market, there is different securities accountseach of which has its own specificities.
But know that the most used supports there remains the Equity Savings Plan (PEA) and the ordinary securities account.
The PEA account is a personal securities account allowing access to tax benefits such as exemption from capital gains tax. For this, a minimum of 5 years of account ownership is required. And are eligible for the PEA the securities of companies whose head office is located in the European Union (+ Norway and Iceland) and subject to corporate tax.
To know : since 2014, it is also possible to opt for a PEA-PME account. But this is reserved for securities of listed small and medium-sized companies. In any case, it is essential to choose an investment medium that meets your investor profile.
What does the financial intermediary do? How to choose it?
Once the appropriate account has been identified for your investment, you must determine the financial intermediary who will receive and execute all of your buy and sell orders. When you want to buy shares on the stock market, this step should not be overlooked.
To make your choice, you must take into account a number of criteria:
- brokerage fees ;
- additional costs;
- quality of customer service;
- quality of stock market access platforms.
Note that to serve as your financial intermediary, any company, whether French or foreign, must be registered as an « investment service provider » or PSI (investment firm, bank, online broker). And the company must also be listed in the register of financial agents. To buy shares on the stock market in the rules of the art, it is therefore advisable to inquire beforehand about the intermediary. And not to trust just any company.
To know : financial intermediaries have an obligation to take all sufficient measures to obtain the best possible result for their clients. This takes into account price, cost, speed, likelihood of execution, settlement, nature of the order, etc. Each institution must publish its execution policy, in other words its strategy.
The steps to follow to seek an action
For your first steps in the world of the stock market to be promising, you must be rigorous and vigilant:
- first, by doing research on the Internet, you will easily find the data that interests you on a company (the price, quotation elements);
- then, be careful not to make a mistake by checking the unique 12-character identifier of the action. This is then the ISIN code and a mnemonic. These two elements always appear at the top of the value sheet of the action sought;
- then, understand that for the same ISIN code, you can find different market places on a listed share. It is the same action but depending on the place chosen, the costs, the liquidity and its price differ;
- therefore, to avoid any confusion, when buying a share, make sure of its ISIN code and that its listing place is indeed the main one. This ensures you the best liquidity;
- finally, note that a listed share is always linked to a reference market. In France, the reference regulated market is Euronext Paris. It brings together all the securities listed on the Paris Stock Exchange.
Also read: How to buy shares in a company?
The procedure for buying or selling a stock on the stock exchange
To buy a share on the stock market or sell it, there are specific steps to take. Already, your stock market orders must be sent to your financial intermediary. This is the professional (banker, online broker) who has opened a securities account in your name.
In the agreement signed when opening this account, check the methods of transmission of stock market orders (Internet, telephone, etc.).
To transmit your buy or sell order to the market, you must provide certain information:
- security to be negotiated, i.e. the name of the company, its Mnemonic code or its ISIN code in order to identify it;
- whether it is a purchase or a sale;
- the quantity of securities;
- the type of stock market order (at market, at the best limit, at a limit, etc.);
- the type of payment (cash, according to eligibility, etc.);
- and the period of validity of the order.
Once this information has been transmitted to your financial intermediary, the intention to buy shares on the stock market (or to sell) is transmitted to the stock market. The intermediary then selected the most favorable place of execution beforehand. This is called “best execution”. This is an obligation ordered by the Markets in Financial Instruments Directive (MIF).
Finally, as soon as the order is executed, whether it is a purchase or a sale, your intermediary is required to send you a transaction notice. This is a summary report of the execution conditions of the order placed (nature of the order, amount, date, pricing conditions, etc.). Keep this notice which will be useful to you in the event of a complaint. From now on, all of your acquired securities can be found in your PEA or securities portfolio, depending on the type of account opened.
Read also: What are the secrets of the history of the Paris Stock Exchange?