How to Buy a New Issue Stock (5 Steps)

Buy new stock issues if you are an aggressive trader. New issue stock refers to stock offered for the first time in the market. It is also referred to as an initial public offering. An existing public company offering of stock is called a secondary stock offering.
You may wish to alert your broker that you intend to buy new issue stock. Brokers have regular access to new issue deals, but the lead manager of the offering controls where most of the stock goes. Deals come very quickly, and hot or strong deals have many indications of interest. You may be asked to increase your order knowing your order will be cut back sharply.
New issue stock for strong deals is usually allocated to the best clients of the firm. Some firms demand a lockup period of several days or weeks before you can sell the stock. If this is the case, it not wise to deal in new issues with this broker.
The managers of the deal will give a range of price for the stock offerings. The earlier you commit to a stock, the greater chance you have of getting it. If the deal is not strong, the broker should talk to his underwriters and advise you. Deals are usually very volatile and subject to heavy volume and churning by day traders.
Purchase stocks for $10 per share or more. Stocks below this price are usually intended for penny stock traders and uninitiated investors. Stay away from these stocks. Successful new issues demand institutional support. In addition, if the stock is moving up in price with strong volume and then retrenching in light volume do not sell the stock. This pattern is indicative of a healthy stock with continuing good technical strength.

How to Buy Stock in Twitter

Check into the websites SharesPost.com and SecondMarket.com. These companies have recently emerged as private stock exchanges for members of private companies who want to sell some of their shares before going public. According to Fox News, 'These exchanges give stakeholders an alternative way to trade their shares in hot startups like Facebook for cold, hard cash --- without having to wait years for an IPO.' Some private companies give their employees shares in order to compensate for an initial inability to pay higher salaries. This option gives those employees a way to see some money more quickly (See References 1).
Do your research on the trends of this type of stock. Will Twitter continue to take off or is it a trend that will soon fade away? It's particularly important to carefully weigh your options if you're considering buying Twitter shares before they go public, since buying through private stock exchanges means buying whole blocks at once. Writer MHB for TheDomains.com explains, 'I'm talking about 60,000 shares at $31 a share comes to an almost $1.9 million dollar investment; no small amount of change.' In other words, if you want to buy stock in Twitter before it goes public, you should be confident in your investment (See References 2).
Register with one of the private stock exchanges. Once you create a profile, you'll be able to see how much other people have paid for shares of Twitter and other privately-owned stocks. Most of these companies also provide you with a report on the company and their current value. It's important to remember that you won't be able to sell your shares until the company goes public, which means you may be sitting on these shares for months or years, in which time the market may shift. 'You might therefore be buying restricted stock for the same price or less than free trading stock is selling for once the company goes public.On the other hand, if you find a hot startup, and get in early, you might make a huge pop down the line if you have the cash to tie up for a while,' says MHB of TheDomains.com. Since the investment is so big, it's important to discuss your decisions with financial advisors before moving forward with the purchase of a block of stocks (See References 2).