You need a brokerage account, money to invest, and about 10 minutes to place your first trade

Buying stocks online means opening an account with a brokerage firm, depositing money, and then using their website or app to search for a stock and place an order. The entire process from account opening to your first purchase typically takes a few days because of settlement rules — your money has to clear and the brokerage has to verify your identity. Once your account is funded, placing an individual trade takes minutes.

The steps are straightforward, but the choice of brokerage matters because different firms charge different fees, offer different research tools, and set different minimum account balances. Some brokerages have no minimum at all; others require $500 or $1,000 to start. The cost of buying a single stock has dropped to zero at most major brokerages, so your main decision is which platform feels easiest to use and which research tools help you make decisions.

Key Takeaways

  • You open a brokerage account by providing your name, address, Social Security number, and employment information, then linking a bank account or mailing a check.
  • Most major brokerages charge no commission to buy or sell stocks, though some charge fees for certain types of orders or research services.
  • Once your account is funded, you search for a stock by ticker symbol, review the current price, decide how many shares you want, and submit a market or limit order.
  • Your order settles in two business days, meaning the stock appears in your account and your cash is deducted, but you can sell before settlement completes.
  • Different brokerages offer different tools for researching stocks — some include analyst reports and screening tools, while others keep research minimal and cheap.

Choosing a brokerage and opening your account

The major brokerages that accept individual investors are Fidelity, Charles Schwab, E*TRADE, TD Ameritrade, Robinhood, Webull, and Interactive Brokers. Each one has a website and mobile app. Most have no account minimum, though a few require $500 or $1,000 to open. All of them are regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), which means your cash and stocks are protected if the brokerage fails.

To open an account, you visit the brokerage's website and click the button to create a new account. You will enter your full name, date of birth, address, Social Security number, employment status, and annual income. The brokerage uses this information to verify your identity and comply with anti-money-laundering rules. The process takes about 10 minutes. You will then choose how to fund the account — either by linking your bank account for electronic transfer or by mailing a check. Electronic transfers usually clear within one to three business days.

Before you open an account, spend 15 minutes on each brokerage's website to see which one feels natural to you. Some brokerages like Fidelity and Charles Schwab offer extensive research tools and educational articles. Others like Robinhood keep the interface straightforward and focus on speed. If you plan to research stocks carefully before buying, a platform with built-in analyst reports and stock screening tools saves you time. If you already know what you want to buy, a simpler platform works fine.

Funding your account and understanding settlement

Once your account is open, you need to move money into it before you can buy stocks. Most brokerages let you link your checking or savings account and transfer money electronically. This usually takes one to three business days. Some brokerages also accept wire transfers, which settle the same day, or allow you to mail a check, which takes five to seven business days.

After your money arrives in your brokerage account, it sits as cash and is ready to use. When you place a stock order, the cash is deducted when ready, but the trade itself settles two business days later. Settlement means the stock officially moves into your account and the seller receives the cash. You do not have to wait for settlement to sell the stock again — you can sell it the next day if you want — but you cannot withdraw the cash until settlement is complete. This two-day settlement rule applies to all stock trades in the United States.

Searching for and ordering a stock

Once your account is funded, you log in to your brokerage and look for the "Trade" or "Buy" button. You will see a search box where you enter the stock's ticker symbol — a one- to four-letter code that identifies the company. Apple is AAPL, Microsoft is MSFT, Tesla is TSLA. If you do not know the ticker, you can search by company name and the brokerage will show you the results.

After you select the stock, the brokerage shows you the current price, the bid-ask spread (the difference between what buyers are willing to pay and what sellers are asking), and recent trading volume. You then decide how many shares you want to buy. If the stock costs $150 per share and you have $3,000 in your account, you can buy 20 shares. You do not have to buy a round number — you can buy 15 shares or 20.5 shares if you want.

Next, you choose the type of order. A market order buys the stock at the current market price when ready. A limit order lets you set a maximum price you are willing to pay — if the stock is trading at $150 but you only want to pay $148, you place a limit order at $148 and it fills only if the price drops to that level or below. Market orders fill when ready during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays). Limit orders may take hours or days to fill, or may never fill if the price never reaches your limit.

After you review the order details, you click "Submit" or "Place Order". The brokerage confirms the trade and shows you an order confirmation number. Your account balance updates when ready to reflect the cash deducted, and the stock appears in your holdings within seconds, though it will not officially settle for two business days.

Understanding costs and fees

Commission — the fee to buy or sell a stock — is now zero at all major brokerages. This is a recent change; until 2019, most brokerages charged $5 to $10 per trade. Today you pay nothing to buy or sell a stock.

Some brokerages charge other fees that you should know about. A few charge a monthly account maintenance fee if your balance falls below a certain amount, though most waive this if you set up automatic deposits or have a linked checking account. Some charge fees for certain types of orders, like options orders or after-hours trades. A few charge for premium research tools or real-time data feeds, though basic research is free everywhere.

The biggest cost you will face is not a fee — it is the bid-ask spread. When you place a market order to buy, you pay the asking price (what sellers want). When you sell, you receive the bid price (what buyers offer). The difference is the spread, and it goes to market makers, not to the brokerage. For large, heavily traded stocks like Apple or Microsoft, the spread is usually just a few cents per share. For smaller or less-traded stocks, the spread can be 50 cents or more per share. This is why limit orders can save you money on less-liquid stocks — you can avoid paying the full spread by waiting for a better price.

What happens after you buy

After you place an order, the stock appears in your account when ready, even though it does not officially settle for two business days. You can see it in your holdings, and you can sell it anytime during market hours. Your brokerage shows you the current value of your position — the number of shares times the current stock price — and updates it every few seconds while the market is open.

If the company pays a dividend, the brokerage deposits it into your account automatically. If you own the stock on the dividend record date, you receive the dividend even if you sell the stock before the payment date. If you want to sell, you log in, find the stock in your holdings, click "Sell", enter the number of shares, choose market or limit order, and submit. The process is identical to buying.

Your brokerage sends you a monthly or quarterly statement showing all your trades, your current holdings, and your account value. You can read these statements for your tax records. When you sell a stock, you will owe capital gains tax on any profit, and your brokerage will report the sale to the IRS on Form 1099-B.

Common mistakes to avoid when buying stocks

The most common mistake is placing a market order for a stock that does not trade often. If a stock trades only a few hundred shares per day, a market order can execute at a price far worse than the last quoted price because there are not enough sellers at the current price. For less-liquid stocks, use a limit order and be patient, or accept that you may pay a wider spread.

Another mistake is buying stocks with money you will need soon. Stock prices move up and down, sometimes sharply, and if you need the cash in six months, you might have to sell at a loss. Stocks are meant for money you can leave invested for years.

A third mistake is buying a stock because you heard about it from a friend or social media without understanding what the company does or what you are paying for it. Before you buy, spend 10 minutes reading the company's business description on the brokerage website or on a financial news site. Know whether you are buying because you think the company is undervalued, because you believe in its long-term growth, or for some other reason. Having a reason makes it easier to hold through price swings.

Frequently Asked Questions

Can I buy stocks outside of market hours?

You can place an order anytime, but it will not fill until the market opens. If you place a market order after 4 p.m. Eastern time, it will execute at the opening price the next morning, which may be very different from the last price you saw. For after-hours trades, most brokerages offer extended-hours trading, but spreads are much wider and liquidity is lower. Stick to market hours (9:30 a.m. to 4 p.m. Eastern, Monday through Friday) when you are starting out.

What is the minimum amount of money I need to start?

Most brokerages have no minimum account balance. You can open an account with $1 and buy fractional shares. However, some brokerages require $500 or $1,000 to open. Check the specific brokerage's website before you start. If you want to day trade (buy and sell the same stock on the same day), the SEC requires a minimum account balance of $25,000.

Do I have to pay taxes on stocks I buy?

You do not pay tax when you buy. You pay tax when you sell at a profit. If you hold the stock for more than one year, the profit is taxed as a long-term capital gain, which has lower tax rates than short-term gains. Your brokerage reports all sales to the IRS, so you must report them on your tax return.

What if I want to buy fractional shares?

Most major brokerages now let you buy fractional shares — meaning you can buy 0.5 shares or 2.3 shares instead of whole shares only. This is useful if you have a small amount of money and want to own a stock that costs $500 per share. You can buy $100 worth, which equals 0.2 shares. Fractional shares settle and trade the same way as whole shares.

Can I set up automatic purchases of the same stock every month?

Yes. Most brokerages offer automatic investment plans where you set up a recurring transfer of money and it buys a specific stock or fund on a schedule you choose. This is called dollar-cost averaging and is a way to invest regularly without thinking about market timing. Set it up in your account settings or in the trading section.