How to buy blue chip stocks

1.聽Study the company you want to trade

Don't buy stocks only because some numbers told you to do so. Be sure to understand the difference between market capitalization and the value of the company itself. Please read the recent annual and quarterly reports of the company (SEC 10-Ks and 10-Qs). Read all possible analyst reports and make your judgement.

2.聽Study all legal and tax requirements

Trading stocks is not an easy thing for a beginner. You have to be sure that everything you make is legal and won't harm you in the future. In some countries if you sell a stock back in less than six months you would have to pay additional taxes apart from the fees to the trading system. Check if you can buy international stocks or if it is better for you to stick to your local聽ones.

3.聽Understand your trading system

If you use an online broker, always compare the fee against its competitors. You have to know all possible costs before you send them an initial deposit of funds. This initial deposit can be from USD 500聽to 2000, so you're not playing with a small money you can easily loose. Look for all full-service brokers, discount brokers and normal online brokers and find one that suits you the聽best.

If you're depositing in other currency than USD, please bear in mind possible fees or other costs associated with exchanging the currency to USD in which majority of blue chip stocks is traded. Try to estimate if all transactional fees are not higher than your predicted gain from the stock. If you pay USD 10聽for a transaction, but after selling a stock you get just USD 5聽of additional money, then this is probably not worth the hassle.

4.聽Start slowly

You don't have to buy all stocks that you consider to be blue chips. It's聽not a shame to buy just few stocks a month and don't trade for several weeks or months.

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