How to buy Afterpay (APT) shares

Want to invest in Afterpay (ASX: APT) shares? Online share trading platforms make it easy. We’ll take you through the whole process.

Afterpay only launched in 2016, but the buy now, pay later company has expanded rapidly, replacing the credit card in many millennial wallets. It now has more than 7 million customers worldwide and more than a quarter of a billion dollars in revenue under its belt.

Step 1: Choose a broker

Financial brokers are your ticket to the world of shares. There are hundreds of online brokers available. Afterpay is an interesting case because the company is listed both in Australia and the US. Take your time to find a broker with the features you want.

Some of these features may include:

Low-cost brokerage

Shop around and you’ll be able to find online platforms offering very competitive brokerage rates. Be careful to weigh up brokerage costs against other services the online trader may or may not offer.

Commission-free trading (US shares)

When you are making regular trades, the commissions charged for each transaction can really add up. Commission-free trading can make a big difference, especially for investors with small accounts.

Fractional investing

This is a handy feature that lets you buy part of a share, rather than the whole thing, opening up more options for investing. It also happens to be less risky than buying full shares, where a sharp drop in value could lose you money until it rises again.

Free trades

Some online brokers will offer free trades if you sign up with them, and this may be a consideration when buying your Afterpay shares.

Easy-to-use trading platform

Trading in shares needn’t be complicated, so keep an eye out for a trading platform that is straightforward to use.

Research and reporting

Look for a platform that has a solid research and reporting section that can give you important information about Afterpay, including company overview, price history, recommendations and price forecasts.

Step 2: Funding your account

Now it's time to add some money into your account. Keep in mind that it may take a few days for the money to transfer from your bank account and settle in your online trading platform of choice.

Step 3: Decide how much you want to invest

Now is the time to decide how much you want to risk on those Afterpay shares (ASX: APT). If you are buying Afterpay shares on the US market, (NASDAQ: AFTPF) you can lower your risk through fractional investing.

You can also keep your costs lower by using average down strategies, only increasing your share count during dips so that your portfolio is as cheap as possible.

Step 4: Invest in shares or an ETF?

Another potential option is an ETF or Exchange Traded Fund, which is a way of investing in a market or commodity as a whole rather than a specific company. Your investment then tracks that market or the commodity price, which is safer, but it's harder to beat the market than when you place a riskier investment in a company instead. It's a more diverse investment, but safer and less interesting for active traders.

ETFs holding Afterpay include BetaShares S&P ASX Australian Technology ETF (ATEC), Betaex20 Etf Units (EX20), and Market Vectors Australian Equal Weight ETF (MVW).

Step 5: Decide your order type

Brokers execute trades by following orders that you set, and this is how you decide how you'd like your money to act. There are four main order types:

Market order

Market orders mean shares are bought or sold at whatever the current market price is. For example, you may wish to buy Afterpay shares at $92 per share. When the shares hit $92, your order executes.

Limit order

A buy limit order allows you to put a floor on the value of your shares - you buy when the shares reach a price (or lower) that you nominate.

For example, you may decide you will buy more Afterpay shares when they reach $87 or lower. When the shares hit $87, your trade will start to execute.

Stop limit

This is a sell order and means you put a cap on the value of your shares.

For example, you nominate $107 as the price at which you want to sell your Afterpay shares. When the price reaches that figure, your stop limit order is executed.

Stop loss

Stop loss orders allow you to get out of your shareholding at a nominated price before a price plummet gets too out of hand. For example you may decide you don’t want to hold onto your Afterpay shares if they drop below $80. When the price hits that mark, your order will execute.

Step 6: Place your order

The last step is placing your order, which is often as easy as pressing a button, at which point your online broking platform will get on with the job of executing your trades.

Now you have your hands on your new Afterpay shares, you're free to do what you want with them. It’s a good idea to keep an eye on news reports about Afterpay, and what competitors like Zip (ASX: Z1P) might be up to, as well as company announcements and stock market reports. These can all be useful in giving you a heads-up about potential shifts in share price.