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I'm a newbie in the stock market, well in "RH" & "WB". I just received notice I can buy "some" Stock in $ dollars also, my question is: What is the difference in buying stock in SHARES or in DOLLARS, and what are the PROS & CONS of both? All advice much appreciated, Gracias, Thanks in advance. **BTW this is my 1st question... :)

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    Welcome to Stack. Since I use neither Robinhood or WealthBuilder, I can only guess that they are offering you the ability to buy indicate a dollar amount of your puchase and then they will buy whatever number of shares required to invest that dollar amount – Bob Baerker Jun 26 '20 at 0:11
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    What do you mean by "RH" & "WB"? Who sent you this notice? – yoozer8 Jun 26 '20 at 1:47
  • If a share costs $30 then what's the difference between buying $30 and buying 30 shares? – user253751 Jun 26 '20 at 10:08
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    If share price is $30 then buying 30 shares cost you $900. If share price is $30 and you buy $30 worth of shares then you buy one share. – Bob Baerker Jun 26 '20 at 11:38
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It is two slightly different ways of specifying how much you want to buy when placing a market order (i.e. one that is satisfied at whatever the current price is).

For simplicity, I'm assuming there's no commission or other costs associated with dealing.

Suppose you were interested in a stock that is currently priced at $30 (offer price), and you've got "around" $500 you want to invest. You could either:

  • Place an order for 16 shares (= $500 / $30, in whole numbers1), or:

  • Place an order for (up to) $500 worth of shares.

If you do so fairly quickly after seeing the $30 price-quote, and the price of the shares hasn't changed much, both will achieve essentially the same thing.

However, if the price of the shares does change significantly before your order is executed, the outcome will be different in each case:

  • If you ordered 16 shares, you will still get 16 shares2, but they might cost noticeable more or less than $500. If the price rose to $35, they would cost $560; if it dropped to $25, they would cost $400.

  • If you ordered (up to) $500 worth of shares, you will still get (roughly) $500 worth, but you may get more or less than 16 shares1. As before, if the price rose to $35, you would get 14 shares (costing $490); if the price dropped to $25, you would get 20 shares.

The main danger of ordering by number of shares if that it could cost considerably more than you were intending to spend.


1 As base64 pointed out in a comment, Robbinhood offer fractional shares. Fundamentally I don't believe this alters the answer: it has no effect when specifying the number of shares to buy (other than you can buy in factions of a share), and only a minor effect when specifying the maximum to spend. At $30/share, $500 would get you 16.67 shares (to 2dp, although they can track down to a millionth of a share). At $35/share, you'd get 14.28 shares. You would also be consistently spending $500 (instead of only $490 if you got 14 shares at $35).

1 Depending on the balance in your account, and the terms and conditions of your broker, it's possible that you may not get all 16 shares if the price rose too far.

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    Robinhood offers fractional shares robinhood.com/us/en/support/articles/fractional-shares – base64 Jun 26 '20 at 14:45
  • @base64 Thanks, I wasn't aware of that. I've added a note, though I don't believe it fundamentally changes anything. – TripeHound Jun 26 '20 at 15:03
  • The option to buy stock in dollars rather than shares is a feature of fractional shares. That's a minor difference unless you want to buy amazon with $500 – xyious Jun 26 '20 at 18:07
  • @xyious I'd disagree. The platform I've used in the past didn't do fractional shares, but did allow you to specify either the number of shares, or the amount you wanted to spend. – TripeHound Jun 26 '20 at 18:10
  • Yeah sorry I didn't mention, was mostly regarding the first comment. Also I think Robinhood ripped me off because I bought shares with $5.56 and in my history I bought shares worth $5.28 .... – xyious Jun 26 '20 at 18:36

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