Buying and selling stocks online starts with opening a brokerage account, which is free at most major platforms and takes about 10 to 15 minutes. Once your account is funded, you can purchase shares of individual companies or exchange-traded funds (ETFs) directly from your phone or computer. Here’s how the entire process works, from choosing a broker to placing your first trade.
Choose an Online Broker
Most major online brokers now charge $0 per trade for U.S. stocks and ETFs, and require no minimum deposit to open an account. Fidelity, Charles Schwab, E*TRADE, Robinhood, Webull, and SoFi Active Investing all follow this model. The days of paying $7 or $10 per trade are largely over for basic stock purchases.
That said, brokers can still charge fees in other places. Watch for account transfer fees if you ever move your investments to a different broker, inactivity fees if you leave an account dormant, and subscription charges for premium research tools or advanced trading platforms. If you’re just getting started and plan to buy stocks occasionally, the free tier at any well-known broker will cover what you need.
What actually differentiates brokers at this point is the quality of their tools, mobile app, educational resources, and customer support. Some platforms are built for beginners with simplified interfaces, while others offer detailed charting and screening tools geared toward more active traders. Open a broker’s website or download the app before committing to see if the experience feels intuitive to you.
Open and Fund Your Account
To open a brokerage account, you’ll provide your full name, date of birth, Social Security number (or other tax ID), and a government-issued ID like a driver’s license or passport. Brokers are required to verify your identity under federal anti-money-laundering rules, and they report your investment income to the IRS, which is why the tax ID is mandatory.
The application also asks about your employment status, annual income, net worth, investment experience, and risk tolerance. These questions help the broker determine which products and features to make available to you. For basic stock trading, your answers won’t prevent you from opening the account, but they may affect whether you’re approved for more advanced features like options trading or margin (borrowing money to invest).
Before you finalize, you’ll receive a Customer Relationship Summary, known as Form CRS. This short document explains the broker’s services, fees, and any conflicts of interest. You’ll also agree to a customer agreement that covers the terms of using the platform.
Once approved, link your bank account and transfer money in. Most brokers accept electronic transfers that arrive in one to three business days, though some let you start trading immediately on a portion of the transferred amount while the full deposit settles.
Pick the Right Account Type
Before you start buying, decide which type of account fits your goals. The two most common options are a standard taxable brokerage account and an individual retirement account (IRA).
A taxable brokerage account has no contribution limits and no restrictions on when you can withdraw money. You can put in as much as you want and pull it out at any time. The tradeoff is that you’ll owe taxes on dividends each year and on any profits when you sell a stock. If you hold a stock for more than a year before selling, your gains are taxed at the lower long-term capital gains rate. Sell before a year, and the profit is taxed as ordinary income.
A Roth IRA is a retirement account where you contribute money you’ve already paid income tax on, but your investments then grow tax-free. Qualified withdrawals in retirement come out with zero additional tax. The catch is that Roth IRAs have annual contribution limits and income caps that determine eligibility. There are also penalties for pulling out earnings before retirement age. If you’re investing for the long term and qualify, a Roth IRA can save you a significant amount in taxes over decades.
Many investors eventually use both: a Roth IRA for long-term retirement savings and a taxable account for everything else.
Research Before You Buy
With your account funded, you need to decide what to actually purchase. Every broker provides a search bar where you can look up a company by name or ticker symbol (the short abbreviation used on exchanges, like AAPL for Apple or MSFT for Microsoft).
Before buying any stock, look at a few basics. The company’s price-to-earnings ratio (P/E ratio) tells you how much investors are paying per dollar of the company’s profit, which is a rough gauge of whether the stock is expensive or cheap relative to its earnings. Revenue growth shows whether the company’s sales are increasing. The dividend yield, if one exists, tells you what percentage of the share price the company pays out annually to shareholders.
If picking individual stocks feels overwhelming, ETFs offer a simpler starting point. An ETF is a single investment that holds a basket of stocks. A broad market ETF tracking the S&P 500, for instance, gives you exposure to 500 large U.S. companies in one purchase. This provides instant diversification, meaning your money isn’t riding on the success of any single company.
Place Your First Trade
When you’re ready to buy, you’ll enter the ticker symbol, the number of shares (or dollar amount, since most brokers now allow fractional shares), and the order type. The two order types that matter most are market orders and limit orders.
A market order executes immediately at whatever the current price is. You’ll get your shares right away, but the exact price might shift slightly between when you tap “buy” and when the trade goes through. For large, frequently traded stocks during normal market hours, this difference is usually negligible. For smaller, less actively traded stocks, or during volatile moments, the gap can be wider.
A limit order lets you set the maximum price you’re willing to pay. If the stock is trading at $50 and you set a limit at $48, your order only fills if the price drops to $48 or lower. This gives you price control, but there’s no guarantee the stock will reach your target. Your order might sit unfilled for hours, days, or indefinitely.
For most beginners buying well-known stocks during market hours (9:30 a.m. to 4:00 p.m. Eastern, Monday through Friday), a market order is straightforward and gets the job done. Use limit orders when you want to be precise about the price you pay, or when trading outside normal hours when prices can swing more unpredictably.
After placing the order, you’ll see a confirmation screen showing the number of shares purchased and the price. The shares will appear in your portfolio, typically within seconds for a market order.
Monitor and Manage Your Holdings
Once you own stocks, your broker’s dashboard shows your portfolio value, individual stock performance, and any dividends received. Most platforms send alerts when a stock hits a price you’ve set or when a company you own releases earnings.
Selling works just like buying. Search for the stock in your portfolio, choose “sell,” enter the number of shares or dollar amount, select your order type, and confirm. The proceeds from the sale land in your brokerage account’s cash balance, typically settling in one business day for stocks. From there, you can reinvest or transfer the cash back to your bank.
Keep in mind that every profitable sale in a taxable account creates a taxable event. Your broker will send you a tax form at the start of each year summarizing your gains, losses, and dividend income for the prior year, which you’ll need when filing your return.
How Your Money Is Protected
If your brokerage firm were to go out of business, the Securities Investor Protection Corporation (SIPC) protects your account up to $500,000, including a $250,000 limit for cash. This coverage applies to stocks, bonds, mutual funds, and other securities held at a SIPC-member firm. Nearly all major online brokers are SIPC members.
What SIPC does not cover is a decline in the value of your investments. If a stock you bought drops 40%, that loss is yours. SIPC also doesn’t protect against bad investment advice or cover commodity futures, foreign currency trades, or unregistered digital assets. The protection is specifically for situations where a broker fails and customer assets go missing, not for normal market risk.
To add a layer of caution on your end, enable two-factor authentication on your brokerage account, use a unique password, and avoid accessing your account on public Wi-Fi networks. Your broker encrypts your data, but basic security habits on your side close the gaps.