The cheapest way to buy Amazon (AMZN) stock is with a good broker and plan. In this guide, I’ll show you exactly how to put it all together.
Buying AMZN shares might seem like a daunting process — especially if you’re a newer trader. That’s why we’ve written a step-by-step guide to walk you through the process and help you understand the most affordable way to buy Amazon stock.
If you look at Amazon’s chart, you might think it isn’t cheap anymore. I like to say that the best time to start trading was 20 years ago — but the second best time is today.
Let’s get into it…
How to Buy Amazon Stock (NASDAQ: AMZN)
Here are five simple steps to buy Amazon stock.
1. Open a Brokerage Account that Lets You Trade Amazon Stock
Any U.S. broker should let you trade Amazon stock. In addition to letting you trade Amazon shares, a good broker will provide educational materials, research tools, and quick executions.
Pay attention to commissions and fees when choosing a broker. This may be the difference between a profitable trade and a losing one.
I give some good tips on choosing a broker in this video:
One of my top criteria for choosing a broker is their trading platform. I use StocksToTrade, which will let you trade with the most popular brokers.
StocksToTrade has assembled the best charts, the most versatile screeners, the most probing news scanners, and more to create a one-stop trading machine. I think it’s the best way to trade.
Try StocksToTrade today — only $7 for a 14-day trial!
2. Decide on Your Investment Goals and Risk Tolerance
Are you saving for retirement? Or are you looking for short-term returns?
Trading Amazon stock has to fit your investment goals. Hitting your goals is why you’re trading in the first place!
Amazon stock is what is called a “growth stock.” It’s a sector leader and projects to keep growing…
But it can be volatile too. That’s not great if you can’t afford to lose some or all of your investment.
3. Do Research on Amazon Stock
There are two main types of research you can do on a stock: fundamental and technical analysis. Some traders and investors use one type of analysis more than the other, but both are important to understand:
- Fundamental analysis involves looking at the value of the company and stock. This can involve looking at the company’s financial reports, revenue, dividends, and fundamental indicators like price-to-earnings ratio. These fundamentals help you understand the underlying value of the stock, which may eventually be reflected in the stock’s actual price.
- Technical analysis involves looking at a stock’s chart. Chart patterns can help you identify trends that fly under the radar, and find trading opportunities that others don’t see.
In addition, you should keep on top of Amazon news, as well as sector and macro-economic developments.
Upcoming events like product launches or earnings reports can massively affect a stock’s value. Larger pieces of news or developments that affect the company or sector can also be powerful catalysts.
4. Build Your Amazon Stock Trading Plan
A trading plan will help you focus on your goals, and avoid impulsive moves. Your trading plan could be long-term or short, but it should always focus on your goals.
A good trading plan should include:
- Entry. The price you want to buy Amazon stock at.
- Risk. The amount of money you’re willing to risk losing.
- Goal. The amount of money you want to make on your trade.
Here’s my guide to building a trading plan.
If you’re investing, your goals and risk will be different. They may be for your position to grow by a certain percentage each year…
Even if you’re intending to hold Amazon stock long-term, I think you should still have a clear risk outlined to safeguard your gains. You can always buy more Amazon stock — as long as you still have the money to do so!
5. Place Your Amazon Stock Order
Once you have a good plan, it’s time to put it into action by placing your Amazon stock order.
There are a few steps to this:
- Place a buy limit order. You should always place limit orders, as opposed to market orders. This way you’ll be sure that your actual entry matches your trading plan.
- Set a stop-loss. You should always have a stop-loss set, even if it’s just mental. I recommend a physical stop-loss if you can’t watch the market every day.
- Follow your trading plan. It’s tempting to adjust your trading plan on the fly. But a wishy-washy trading plan is a poor foundation for sustainable success.
Should You Buy Amazon Stock?
You should buy Amazon stock if it fits your investment goals, and your research indicates that there’s an opportunity.
Through much of 2020 and 2021, Amazon stock was at all-time highs. In June of 2022 it did a 20-for-1 split, which led to a quick bump… then a slide of nearly 40% to end the year.
It climbed nearly 50% through the first five months of 2023. With a recent announcement that Amazon may start offering wireless services, there might be more growth in store.
There are other growth stock options out there! Check out our guides on the cheapest way to buy Apple (AAPL) stock, Walmart (WMT) stock, and Tesla (TSLA) stock.
Pros of Buying AMZN Stock
There are a number of advantages to buying Amazon stock.
- E-commerce and Cloud Computing Sector Leader: Amazon leads the market for two of the most important sectors in the modern world.
- Diverse Offerings: Amazon’s e-commerce dominance has paved the way for its diversification into entertainment, product distribution, and more.
- Expansion is always on the Horizon: Healthcare and telecom are new sectors with big growth opportunities. Expansion into new countries is always on the agenda, as well as increasing offerings for existing markets.
Cons to Buying AMZN Stock
Here are the cons you should weigh when making this decision…
- Regulator Concerns: Is Amazon too big? Any company that has as much power and market dominance as Amazon is a threat to come under regulatory scrutiny.
- Logistical Challenges: Amazon’s U.S. business benefited from an advantageous arrangement with the USPS. Will it find the same angles as it sets up shop elsewhere?
- Intense Competition: Amazon isn’t the only game in town. Its rivals include Walmart in retail, Google and Microsoft in cloud services, and Netflix in streaming services. None of these companies are taking Amazon’s market share advantage passively.