You need a brokerage account, money to invest, and a few minutes to place an order

Buying stocks means purchasing shares of ownership in a company through a brokerage firm — a financial company licensed to buy and sell securities on your behalf. You cannot buy stocks directly from a company or from the stock exchange itself. A brokerage holds your account, executes your trades, and keeps records of what you own.

The basic process is: open an account with a brokerage, deposit money, search for the stock you want by its ticker symbol, decide how many shares to buy, and place your order. The whole transaction typically takes seconds once your account is funded. What varies is the brokerage you choose, the fees they charge, and the types of orders you can place.

Key Takeaways

  • You must open an account with a brokerage firm and pass identity verification before you can buy any stock.
  • Different brokerages charge different fees — some charge per trade, some charge a percentage of your investment, and some charge nothing for stock trades but make money other ways.
  • You buy stocks using a ticker symbol (a short code like AAPL for Apple), not the company name, so you need to know or search for the correct symbol first.
  • A market order buys when ready at the current price, while a limit order lets you set the highest price you will pay and waits until that price is available.

Opening a brokerage account and verifying your identity

Every brokerage requires you to open an account before you can trade. You will provide your name, address, Social Security number, and date of birth. The brokerage uses this information to verify your identity with the Social Security Administration and to comply with federal anti-money-laundering rules.

Most brokerages complete identity verification in minutes. Some may ask follow-up questions if your information does not match their records perfectly — for example, if you recently moved and your address on file differs from your current one. Once verified, you can when ready deposit money and begin trading.

You will also choose the type of account: a standard taxable brokerage account (sometimes called a cash account) or a retirement account like an IRA. A taxable account has no contribution limits and no restrictions on when you withdraw money, but you pay taxes on gains and dividends each year. A retirement account has annual contribution limits but offers tax advantages — you may deduct contributions or let gains grow tax-free depending on the account type.

Depositing money into your account

After your account opens, you must deposit money before you can buy stocks. Most brokerages let you link a bank account and transfer money electronically. The transfer usually takes one to three business days, though some brokerages offer when ready deposits for a small fee or through their own apps.

The amount you deposit is entirely up to you — there is no minimum to open an account at most brokerages, though some require a minimum deposit to avoid monthly fees. You can deposit as little as $1 and buy fractional shares (a portion of a share rather than a whole share) at many brokerages, so cost is not a barrier to starting.

Finding the stock you want to buy

Stocks are identified by a ticker symbol — a short code of letters assigned by the exchange where the stock trades. Apple's ticker is AAPL, Microsoft's is MSFT, and Tesla's is TSLA. You need the correct ticker symbol to search for and buy a stock.

If you do not know a company's ticker, search the company name plus "ticker symbol" in any search engine, or use your brokerage's search tool. Most brokerage platforms let you type the company name and will show you matching stocks with their symbols. Once you find the stock, the platform will show you the current price per share, the day's price movement, and historical charts.

Placing a stock order: market orders versus limit orders

Once you have found the stock and decided how many shares you want, you place an order. The two most common order types are market orders and limit orders.

A market order buys when ready at whatever the current market price is. If you place a market order for 10 shares of a stock trading at $50 per share, you will pay approximately $500 (plus any fees). Market orders execute almost when ready during market hours, but the exact price you pay may be slightly different from the price you saw on screen because stock prices move constantly. This difference is called slippage.

A limit order lets you set the maximum price you will pay. If you place a limit order to buy 10 shares at $48 per share, your order will only execute if the stock price drops to $48 or lower. If the price never reaches your limit, your order never fills and you do not buy the stock. Limit orders can take hours, days, or weeks to fill — or may never fill at all.

Understanding fees and how brokerages make money

Brokerage fees vary widely. Some brokerages charge no commission on stock trades — they make money through other means like lending your shares to short-sellers, earning interest on your cash balance, or charging for premium features. Others charge a flat fee per trade (typically $5 to $10), a percentage of your trade size, or a monthly account fee.

Before opening an account, check the brokerage's fee schedule. The difference between a $0 commission broker and one charging $10 per trade adds up quickly if you buy stocks frequently. If you plan to buy stocks only a few times per year, the fee difference matters less. Some brokerages also charge fees for certain services like transferring your account to another firm or closing your account.

What happens after you buy: settlement and ownership

When your order fills, you own the shares when ready — you can see them in your account right away. However, the transaction does not fully settle for two business days. During this settlement period, your brokerage is collecting the shares from the seller and your bank is transferring the money from your account. You cannot sell the shares until settlement is complete, though you can place a new buy order with unsettled cash at most brokerages.

Once settled, the shares are yours. You will receive dividends if the company pays them, and you can sell the shares whenever you want during market hours. Your brokerage sends you tax documents at the end of the year showing your gains, losses, and dividends so you can report them on your tax return.

Frequently Asked Questions

Can I buy stocks with less than $100?

Yes. Most brokerages now offer fractional shares, meaning you can buy a portion of a share for any dollar amount. If a stock costs $200 per share and you have $50, you can buy 0.25 shares. You own that fractional share and receive dividends proportionally.

What is the difference between a stock exchange and a brokerage?

A stock exchange (like the New York Stock Exchange or NASDAQ) is where stocks are actually bought and sold. A brokerage is a company that connects you to the exchange and executes your orders. You cannot trade directly on an exchange — you must go through a brokerage.

Do I have to buy whole shares?

Not anymore. Most brokerages now allow fractional share purchases, so you can invest any amount of money rather than waiting until you have enough for a whole share. Some brokerages still require whole shares, so check your brokerage's rules.

Can I buy stocks outside of market hours?

You can place orders outside market hours, but they will not fill until the market opens. The stock market is open Monday through Friday, 9:30 a.m. to 4 p.m. Eastern Time. Some brokerages offer extended-hours trading before 9:30 a.m. and after 4 p.m., but prices are less stable and spreads are wider during these times.

What happens if I sell a stock at a loss?

You can sell at any time, even if the price has dropped below what you paid. The difference between what you paid and what you sold for is a capital loss. You can use capital losses to offset capital gains on your taxes, and in some cases to reduce your taxable income by up to $3,000 per year.