The exact account and settlement process varies by country.
Before buying
Understand the company, security, exchange, currency, fees and order type.
Order
Know the difference between market and limit orders and verify quantity and price before submitting.
After execution
Keep the confirmation and understand when the trade settles and where the security is held.
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From research to an order
Buying mechanics should come after the investment thesis. Decide what you are buying, how much, the order type, the intended holding period and what would invalidate the thesis.
Market vs limit order
A market order prioritises execution, while a limit order specifies a maximum purchase price. The trade-off is execution certainty versus price control.
Execution risk
Bid-ask spreads, liquidity, volatility and market hours can affect the actual execution price. Thinly traded stocks can move substantially between quote updates.
After purchase
Monitor the business evidence that matters to the thesis rather than reacting to every price movement. Predefine what would cause you to add, reduce or exit.
Buying checklist
- ☐ Thesis written
- ☐ Valuation range defined
- ☐ Order type selected intentionally
- ☐ Position size checked
- ☐ Invalidation/exit conditions documented