Buying a stock takes about five minutes once you have a brokerage account set up. The entire process comes down to three steps: open an account, find the stock you want, and place an order. Here’s exactly how each step works and what it costs.
Open a Brokerage Account
You need a brokerage account to buy stocks. This is a specialized account held at a financial firm that’s licensed to execute trades on your behalf. Most major online brokerages let you open one in under 15 minutes, and many have no account minimum, meaning you can start with any amount of money.
To open the account, you’ll provide your name, Social Security number, date of birth, address, and a government-issued ID like a driver’s license or passport. The brokerage will also ask about your employment status, annual income, net worth, investment experience, and how long you plan to invest. These questions help the firm understand your financial situation and aren’t used to approve or deny you. You’ll also be asked to name a trusted contact person, someone the brokerage can reach out to if there’s ever a concern about activity in your account.
Once the account is open, you’ll need to fund it. Most brokerages accept electronic transfers from a linked bank account, which typically take one to three business days to arrive. Some firms make a portion of your deposit available for trading immediately while the full transfer processes.
Find the Stock You Want to Buy
Every publicly traded company has a ticker symbol, a short abbreviation used to identify it on exchanges. Apple is AAPL, Microsoft is MSFT, and so on. You can search by either the company name or the ticker symbol inside your brokerage’s platform.
Before you buy, take a look at a few key numbers on the stock’s quote page. The current price tells you what the stock last traded for. The bid price is what buyers are currently willing to pay, and the ask price is what sellers are currently asking. The small gap between these two, called the spread, is a real cost of trading. If a stock has a bid of $49.98 and an ask of $50.02, you’ll likely buy closer to $50.02. For heavily traded stocks, this spread is usually just a penny or two. For smaller, less liquid stocks, the spread can be wider.
Choose Your Order Type
When you’re ready to buy, the brokerage will ask you to pick an order type. The two you’ll use most often are market orders and limit orders.
A market order tells the brokerage to buy the stock immediately at whatever the current price is. The trade happens almost instantly during market hours, but the exact price you pay might differ slightly from the last price you saw on screen, especially if the stock is moving fast. Market orders are the simplest option when you want the stock now and aren’t concerned about a few cents of price difference.
A limit order lets you set the maximum price you’re willing to pay. If you want to buy shares of a company but only at $50 or less, you’d place a buy limit order at $50. The trade only goes through if the stock drops to $50 or below. This gives you price control but comes with a tradeoff: if the stock never hits your price, the order won’t execute. You can set limit orders to stay open for the current trading day or until you cancel them.
A third type, the stop order, becomes a market order once the stock hits a price you specify. Buy stop orders are mainly used by traders covering short positions, not typical for someone making a straightforward stock purchase.
Decide How Many Shares to Buy
You can enter the number of shares you want, and the platform will show you the estimated total cost before you confirm. If a stock trades at $200 and you buy 10 shares, you’re spending roughly $2,000 plus any applicable fees.
If the share price is higher than you want to spend, many brokerages now offer fractional shares, letting you buy a piece of a single share based on a dollar amount. You could invest $25 in a stock that trades at $500 and own one-twentieth of a share. Fidelity, Schwab, Robinhood, and Interactive Brokers all support fractional trading, with minimums as low as $1. Not every stock is eligible for fractional purchases at every brokerage, so check your platform’s specific offerings.
What It Costs
Most major online brokerages charge $0 in commissions for stock trades. This was a significant shift that happened across the industry starting in late 2019, and it’s now the standard for U.S.-listed stocks and ETFs.
That doesn’t mean trading is entirely free. You still pay the bid-ask spread on every trade, which is baked into the price you receive rather than charged as a separate fee. The SEC also collects a small regulatory fee on sell transactions, currently $20.60 per million dollars. On a $5,000 sale, that works out to about one cent, so it’s negligible for individual investors. Some brokerages absorb this fee entirely.
The more meaningful cost to watch is the price you pay for the stock itself. Placing a market order on a volatile day or on a thinly traded stock can mean paying more than you expected. Using limit orders eliminates that risk.
When the Stock Becomes Yours
After you place the order and it executes, you’ll see the shares in your account almost immediately. But behind the scenes, the official transfer of ownership takes one business day. This is called T+1 settlement, a standard that took effect on May 28, 2024. “T” is the trade date, and “+1” means settlement happens the next business day.
In practical terms, T+1 means the cash leaves your account and the shares are formally delivered the day after you trade. If you buy on a Monday, settlement happens Tuesday. If you buy on a Friday, settlement happens the following Monday. During this window, the shares show up in your portfolio and you can sell them, but the funds from any sale won’t be fully settled until their own T+1 cycle completes.
Placing the Order Step by Step
Here’s what the actual buying process looks like on screen, regardless of which brokerage you use:
- Search for the stock by name or ticker symbol.
- Click “Buy” or “Trade” on the stock’s page.
- Select your order type (market or limit).
- Enter the quantity in shares or dollars if your brokerage supports fractional trading.
- Review the order summary, which shows the estimated cost and any fees.
- Confirm the order. The trade executes immediately for market orders during trading hours (9:30 a.m. to 4:00 p.m. Eastern, Monday through Friday). Limit orders execute when the stock hits your price.
Some brokerages also offer extended-hours trading before and after the regular session, though spreads tend to be wider and prices more volatile during those periods. If you’re buying your first stock, sticking to regular market hours keeps things straightforward.