- Ready to buy into one of Amazon’s biggest retail competitors?
- Learn what to look for when choosing a broker.
- Decide what order type will support your trading strategy.
Walmart (NYSE: WMT) is one of America's leading big-box retailers, with a global footprint in countries around the world. The company offers traders a stable stock with steady growth.
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With headquarters in Bentonville, AK, WMT is a global conglomerate operating over 11,500 stores in 28 countries. The company launched its IPO in 1972, with an initial list price of $16.50 per share.
Walmart's founder, Sam Walton, grew the company into America's biggest business before the tech era. In its first few decades of operation, Walmart was also one of America's biggest employers. The family still owns a significant portion in the business, with the Walton family having a net worth of around $215 billion.
With the retailer’s expansion to online shopping, shoppers are using WMT as an alternative to Amazon. The company offers day traders exciting trading opportunities around earnings reports. This brief guide helps you understand the basics of trading WMT.
Where to buy Walmart stock
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Step 1: Open a brokerage account
To trade stocks, you will need to open an account with a discount broker to act as your bridge to the market. Different brokers have different offerings and you’ll need to spend some time analyzing the best options for your account. Here are the features you need to look for in your brokerage firm.
Trading apps like Stash, Webull, eToro, and Robinhood successfully drew millennial traders by offering commission-free trades. Today, most large brokers also offer zero commissions, including big names like TD Ameritrade, E*TRADE, and Charles Schwab.
Fractional share trading
If you want to trade WMT with a $300 balance, a single share will take up almost half your account balance, which is risky. Fractional shares give you exposure to WMT without assuming the risk of buying a full share and allowing you to diversify into other names.
Low account fees
Brokers compete with each other for your business by offering competitive fees. Compare fee schedules between firms and choose the best offering. Look at the requirements for monthly account minimums, inactivity fees, and transaction fees.
Trading on margin offers you the fastest way to build a small account. Brokers will provide you up to 6:1 margin on certain stocks. If your account has a $300 balance, you can buy shares worth up to $1,800 with 6:1 leverage from your broker. If the share price starts falling, your broker may have you post additional capital as maintenance margin.
Real-time data and charts
Your broker issues you with charts included with your trading platform. Look for feature-rich charts that have plenty of indicators to experiment with during your trading. Most brokers have a 15 second delay on price quotes. Therefore, if you’re a day trader, you’ll need to purchase live market data separately.
Step 2: Funds your trading account
You'll fund your broker account with a wire transfer or debit card. Typically the wire transfer is more expensive, and debit cards are the better choice for smaller accounts. Many brokers also have direct integration with your bank account, which offers even faster transfers.
Step 3: Decide how much to invest
Choosing to invest your money in the stock market is risky, and you'll need to invest per your risk tolerance.
Taking out a second mortgage to fund your trading account or withdrawing from your credit card would be a bad strategy. What if you lose it all? It’s important to only take on risk with what you can afford to lose.
Step 4: Choose between a share of stock or ETFs
WMT trades as stock and as part of an ETF (exchange-Traded Fund). WMT stock is expensive. Using an ETF like the Consumer Staples Select Sector SPDR Fund gives you exposure to the price movement in Walmart stock while reducing your risk by offering diversification.
Step 5: Configure your order
After choosing your asset, it’s time to place the first trade on your trading platform. Here are the order types you need to understand before you start trading.
This order type gets you into WMT stock at the next price quoted by the market. However, it might be several cents above when you click the buy button, which means "slippage" on your order.
The limit order helps you avoid slippage in your entries. If you set the limit order at $150, the broker only fills you at this price. However, while you avoid slippage, your order might not fill in fast-moving markets.
This order type lets you automatically liquidate your position at a set price. Say you enter WMT at $150, with a target of $160. You set the stop limit at this price, and the broker takes you out of your position when you achieve your target, locking in a profit.
The stop loss prevents your trading account from sustaining a catastrophic hit if the market moves against you. If you buy into WMT at $150, you can set a stop loss at 5% below the entry, which is $142.50. If the market dips to this level, the broker liquidates your position automatically, limiting your loss.
Step 6: Submit your trade
Once you understand the order types and how they affect your trades, open your broker platform. You'll see fields to enter the number of shares you want to buy, as well as your limit order price and order type.
When you're ready to enter WMT, click the buy button, and the broker executes your order. Hit the sell button for the broker to get you out of the position.
Step 7: Monitor how Walmart performs
WMT sees its biggest trading days around earnings reports and retail market events. Other market factors affecting the food and retail industry may also cause price changes, including expansion plans or store closures. Keep an eye out for news that may shift market sentiment around the stock, for example, acquisitions and retrenchments either Walmart or their competitors announce.