I want to buy Stocks
A step by step guide on how to buy stocks or shares in the philippine stock market
You want to buy stocks? Who doesn't as long as you have the capital, all it takes is a minimum of P5,000 pesos investment, a computer (desktop, smartphone, tablet etc.) with internet access and you are at least 18 years old.
For starters, stocks are your shares of ownership on a Corporation. The good part about a corporation is it has its own life, laws and system than regular small business, meaning if the corporation is held liable or has debts the liability remains in the corporation because its an independent entity and you are not liable with anything. Aside from that it runs on its own, you can sleep all day and they dont care. Its like a money tree, you just plant and it grows in time... as long as you know what you are doing, though you don't need to be a genius to figure that out, even a Juan Tamad like me can understand.
The disadvantage of a corporation is you have less control, the only thing you could do is vote officials that will run the corporation during elections, and eat some food during stockholders meeting but that is not mandatory, and Lastly... the most important thing you could do is, Sell your shares of stocks, Buy or Hold... that is where the ball game is. And where do all this things happen? In the Market of course, the Philippine Stock Exchange.
Now where do we start... first you need an online account, yes, buying stocks is just like facebooking, if you know how to use facebook, you know how to buy stocks, you just log-on and click and click, that is the easy part.
The boring part is registering your account, don't worry as this is just one time only so bear with it, but for me this is troublesome but Im sure its a piece of cake for you. Where to register? No, not in the Philippine Stock Exchange, you need a Broker, they are the one to handle your online account and the go between You and the Stock Market. It works like this:
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| drawn using GIMP |
There are several brokers out there, If you already have BPI bank account, you can start easily with BPI Trade. Another top popular broker is CitisecOnline, but of course I will cover Philstocks™, why Philstocks™? Well because that is where I registered back then in 2008 because of its low P5,000 initial deposit, that deposit is what you are going to use to buy stocks, its not a fee or what... kinda like opening a bank account, of course you are not limited to that amount, you can put more like P25,000, and more on later via bank deposit or office walk-in, but its safe to play with small amount at first until you get the drift. I will explain to you my first hand experience, been there done that as they say.
1. Let's start by going to Philstocks™ website and click Register Now. There you will fill up the online form, you need to input your real name and address not an alternickname. Because your broker will use that information for the corporation you bought so in case you get Dividends(cash earnings) from a corporation, it knows where to name and address the check. They will also send you activation letter on your E-Mail, so anything you fill up in there must be real.
2. Next is funding your account, this is where you will put your P5,000, there is a lot of method as stated to their website using cash transfer, ATMs, bank deposit or just walk-in to their office.
3. Then download, print and fill up the Customer Account Information Form (CAIF) then drop by at their office and don't forget to bring a valid ID.
View Tektite Towers in a larger map |
When you enter the main entrance with x-ray baggage and metal detectors at the ground floor, go to the left part of the tower till you reach the far end, that is where the Philstocks™ office is, then enter the "Investor's Lounge" glass door from the right, not the one from the left with lots of computers.
After registering your account, probably just wait for a few days before your online account gets active, you will receive e-mail confirmation along with your PIN number, then you can now start buying stocks!, its that easy!.. I sound like a sales person, but I'm not connected to Philstocks™ whatsoever but just a customer happy of their service and of course, I am just explaining my first hand experience because I don't have experience with other brokers.
Adding funds to your account would be easier via cash transfer, ATMs, bank deposit etc, or you could still do office walk-in if you like.
Now that you have an online account, I'll tell how to use it and things you should know.
Once you log onto your account, this is what you will see:
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| click picture to enlarge |
(a) Pin a particular stock; This is like a bookmark where you pin your favorite or monitored stock in your main screen for fast access.
(b) This is the latest price sold in the market of a particular stock selected using the search function or bookmarked, includes price since the last 52 weeks.
(c) Search function; Where you input the code of a particular stock to show in the main screen for analysis, stocks are coded like for example is on the screen "Greenergy Holdings Inc." is coded as "GREEN". You can also select the SYMBOL button if you do not know the code of a particular stocks you are looking for.
(d) This is the main Philippine Stock Exchange index, the overall average value of the stocks traded on the current day. This is your gauge if the market is going up(green color) or down(red color).
(e) Every transaction is shown here, it shows the code of a stock, volume and price that where sold or bought in real time.
(f) BID and ASK; This is where the negotiation occurs and the essence of the market trading. This is the battle between the seller(owner of a stock) and the buyer(interested in the stock). The law of Supply and Demand is at play, the Supplier is the ASK, the Demand is the BID.
BID is the bidding price of the buyer, its like the buyer saying "i'll buy this stock if you can give it at this price". Probably you are new this is where you start... buying stocks.
ASK is the asking price of the seller the one who owns the stocks, he is saying "this is my selling price".
Either one will give in to their demands of the stock prices, the Buyer will buy the asking price of the Seller of stocks or the Seller will give in to the Buyers bidding price of the stocks. When that occurs, its called a "MATCHED" where a transaction occurs.
Volume is the quantity of the stocks, if the price of a stock is P10 then a Volume of 500 = P5,000. Fees and Tax are not included, though its only a very small amount it will only be realized after a successful transaction or orders matched.
(g) Your balance or credit on your account, this is where your deposit goes, it is actual money.
(h) This is the status of the stock market; Pre-opens at 9am where it starts accepting orders, but will be fully Open and transaction will start at 9:30am, Recess at 12noon then resumes at 1:30pm, Pre-close at 3:17pm, Market closes at 3:30pm. Close during Sat-Sun and on Holidays. If you buy or sell a stock where the market is close, it will be recorded through your broker and your orders will be active when the market pre-opens.
(i) Some data of a particular stock you selected on the main screen like Price/Equity ratio, Dividends etc. This are one of the tools you need to understand at least if a particular stock(corporation) is performing well based on its price. But you can skip this and learn later on, because I'm explaining how buying works and not what stocks to buy, and you get the feeling of "hey my first stock" just use a small amount though because this is for testing purposes and you might regret buying something you don't know.
(j) The BUY icon; this is where you go if you want to start buying a stock. (see next picture below on how to buy).
PORTFOLIO icon; It show what stocks you currently own.
SELL icon; this is where you sell stocks you currently own, if you know how to buy stocks, it would be the same as selling.
ADD FUNDS icon; Where you add funds or deposit to your account balance electronically like ATM etc.
ORDERS icon; This shows your pending order, selling or buying stocks that has not yet met its matched. All your orders will be cleared if the market closes and it did not met its match, not unless you selected in the option GTW(Good till week) GTM(month) GTY(year) which it will stay in the order list until the selected duration ends, you can use this if you will go on vacation and you want to sell or buy stocks at the said price or for your strategy like falling in line after sometime because orders in the market are first come first serve basis.
MATCHED icon; When your orders of buying or selling a stock met its matched and has successfully sold or bought, it will reflect into this area on the current trading day.
Let's Start Buying Stocks
Click the Buy icon. A pop-up window will appear on the right side like this one;
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| click picture to enlarge |
Shares is the Volume or quantity of how many stocks you want to buy. In this example its 1,000,000 volume
(b) Price; is the cost of each stock you want. In this example it is priced at P0.0160 a piece, sub total the volume and price is equals to P16,000.
Fees; That is where the broker gets their commission, it also includes taxes, the good part in the stock market is taxes are automatically paid during selling and buying including cash dividends, so you don't have to worry about Income Tax returns nor Capital Gains tax and such later on. Its a small amount anyway as you can see only P49.95 for a P16,000 transaction. Grand Total of P16,049.95.
(c) Lot; This is the type of Volume or quantity of shares to buy, can be chosen as Normal or Odd. Normal is 10,000 1,000,000 and such, while Odd is 584,594 12,409. The market rarely use Odd lot because its confusing, so they make Normal as simply Flat rate, the Odd lot is separated to Normal lots, so you can only buy separate Odd lot that is available in the market, You cannot buy normally let say 12,483 volume of shares, it has to be 10,000 20,000 30,000 and up... no 21,395.
Another thing to know is the Board lot, it is the minimum volume you can buy in a particular stock, like in the example, GREEN's board lot is 100,000 so you cannot buy a volume that is lesser than 100,000. Example is buying 2 piece of stock, that is not allowed not unless there is an available ones in the Odd lot department. Odd lot arises from stock dividends, another form of dividends but instead of cash, its in the form of shares of stocks.
Validity; The duration of your order, usually it only takes a day, once the market closes, all unmatched orders will be cleared, but if you selected any of these GTW(good till week) GTM(month) GTY(year) your orders will last until the duration is over or if it has met its matched within the duration. example is the seller(ASK) is asking for a price of P12 for his stocks, then you know the stock is bad, the corporation is having a bad time and the news is hitting it like nail, a landslide in the mines has hamper the companies operation so you anticipated its price would fall down to P10 pesos after a week or month but you are going on a vacation at that time or you want to be days or weeks ahead of the line as this is first come first serve basis, so you order your BID price to P10 pesos right now and set its validity to GTM(good till month), so now you want to buy it at P10 pesos, your order is valid for a month, but the seller wants P12 pesos a piece, there is no MATCH in this situation on the current day, but after a few days or weeks, the stock price did went bad and the sellers(ASK) now wants to sell it at P10 pesos a piece, so in this situation your BID price and his ASK price matches P10 pesos a piece, so there is a "MATCHED" in the order, your order will disappear because its fulfilled and will reflect to the MATCHED icon including the details of the transaction and successfully purchased stocks will be placed on your PORTFOLIO.
Submit; This is where you finalize your orders, a 4-numeric trading PIN will be required before you proceed, and the broker will then submit your ORDERS to the Market and waits for a MATCHED the action happens in real time. Where is your trading PIN? check your e-mail, it will be sent to you once your account is now active after your registration.
Once you have purchased your stocks, you can go to your PORTFOLIO to check it out and you can now sell it if you want, the format for selling is the same as buying, just press the SELL icon and you would know how it works.
Juan Tamad Sayings:
After reading this and you got your interest, you should start investing now, don't give yourself excuses as "next week" or "next month" but now. Because like planting trees to benefit now, you should have planted it long ago so stop wasting time and go ahead, don't think too much but act, get out of your comfort zone at least a little. You won't know where you are good at if you won't try
Philstocks.ph™ is the online trading division of Accord Capital Equities Corporation
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