You need a brokerage account to buy stocks online

You cannot buy stocks directly from a company or the stock exchange. You buy through a brokerage — a financial firm licensed to execute trades on your behalf. The brokerage holds your money, executes your buy and sell orders, and keeps records of what you own.

Opening an account takes 10 to 20 minutes online. You provide your name, address, Social Security number, and employment information. The brokerage runs a background check and verifies your identity. Most accounts are approved the same day or within 24 hours. You then deposit money into the account before you can buy anything.

Popular brokerages include Fidelity, Charles Schwab, E*TRADE, TD Ameritrade, and Robinhood. Smaller brokerages exist as well. Most charge no commission to buy or sell stocks — this was not true 10 years ago, but it is standard now. Some charge monthly account fees if your balance falls below a minimum; others do not.

Key Takeaways

  • You open a brokerage account online by providing your name, address, Social Security number, and employment history; approval usually takes one day.
  • You must deposit money into the account before you can buy stocks; most brokerages accept bank transfers, which take one to three business days to clear.
  • Once money is in your account, you search for a stock by its ticker symbol, enter the number of shares you want, and confirm the order.
  • Stock orders execute during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays); orders placed outside these hours execute at the next market open.
  • You own the stock immediately after the order executes, though the settlement process (the brokerage taking possession on your behalf) takes two business days.

Choosing a brokerage and opening an account

Compare brokerages on three things: commission structure, account minimums, and research tools. Most brokerages charge zero commission per trade now. Some have no account minimum; others require $500 to $2,500 to open. Research tools — stock screeners, news feeds, analyst reports — vary widely. If you are new to stocks, a simple interface matters more than advanced tools.

To open an account, go to the brokerage's website and click "Open an Account" or "Sign Up". You will enter your legal name, date of birth, address, phone number, and email. You will provide your Social Security number and answer questions about your employment and investment experience. The brokerage uses this information to verify your identity and comply with federal regulations.

After you submit, the brokerage reviews your application. Most approve within hours. You will receive an email with your account number and login credentials. Some brokerages ask you to set up two-factor authentication (a code sent to your phone when you log in) for security.

Depositing money into your account

Once your account is open, you cannot buy stocks until money is in it. You deposit by linking a bank account. Go to the "Deposit" or "Transfer Funds" section of your brokerage account and enter your bank's routing number and your account number. The brokerage will initiate a transfer from your bank to your brokerage account.

Bank transfers take one to three business days to clear. Some brokerages offer instant deposits for small amounts (typically up to $1,000) if you link your account through a service like Plaid, which connects your bank instantly. If you need to buy stocks immediately, instant deposit is faster, but it may carry a small fee.

You can deposit as little as $1 at most brokerages. There is no rule that says you must start with a large amount. Many people deposit $100 to $500 for their first purchase.

Finding and buying a specific stock

Once money is in your account, log in to your brokerage and look for the "Trade" or "Buy" section. You will see a search box. Enter the stock's ticker symbol — a one- to four-letter code that identifies the company. Apple's ticker is AAPL, Microsoft is MSFT, Tesla is TSLA. If you do not know the ticker, type the company name and the brokerage will show you matching stocks.

Click on the stock. You will see the current price, a chart of its price over time, and news about the company. Enter the number of shares you want to buy. If the stock costs $150 per share and you want to spend $300, you enter 2 shares. The brokerage shows you the total cost before you confirm.

Choose your order type. A market order buys the stock at whatever the current price is when your order executes. A limit order lets you set a maximum price you will pay; if the stock is trading above that price, your order waits until it drops or does not execute at all. For a first purchase, a market order is simpler.

Review the order one more time and click "Confirm" or "Place Order". The brokerage sends your order to the stock exchange.

When your order executes and what happens next

If you place an order during market hours (9:30 a.m. to 4 p.m. Eastern time, Monday through Friday), it executes within seconds. You will see a confirmation screen with the price you paid, the number of shares, and the total cost. Your account balance decreases by that amount immediately.

If you place an order outside market hours or on a weekend, it waits in a queue. It executes at the next market open, usually at 9:30 a.m. the next trading day. The price may be different from what you saw when you placed the order, because stock prices change overnight.

After your order executes, the stock appears in your account under "Holdings" or "Positions". You own it immediately. However, the settlement process — the exchange transferring the shares to your brokerage's name on your behalf — takes two business days. This does not affect you as an owner, but it means you cannot sell the stock until settlement is complete.

Understanding costs and fees

Most brokerages charge zero commission per trade. This means buying 1 share or 100 shares costs the same: nothing. However, other costs exist. If you buy a stock at $100 and sell it at $100, you break even on price, but you may pay a bid-ask spread — the difference between what buyers will pay and what sellers ask. This spread is usually small (a few cents) but it is a real cost.

Some brokerages charge monthly account fees if your balance is below a minimum. Others charge inactivity fees if you do not trade for a certain period. Read the fee schedule before you open an account. For most people starting out, these fees do not apply.

If you hold a stock in a regular taxable account and sell it for a profit, you owe capital gains tax. This is not a fee the brokerage charges; it is a tax you owe to the government. Your brokerage will send you a tax form at the end of the year documenting your gains and losses.

Frequently Asked Questions

Can I buy fractional shares?

Yes. Most brokerages now let you buy partial shares, so you can invest $50 in a $500 stock by buying 0.1 shares. This makes it easier to start with small amounts of money. Not all brokerages offer this, so check before you open an account if it matters to you.

What if I place an order and change my mind?

If your order has not executed yet, you can cancel it. Log into your account, find the pending order, and click "Cancel". If the order has already executed, you own the stock and must sell it to get your money back. Selling takes the same steps as buying.

Do I need a lot of money to start?

No. Most brokerages have no account minimum. You can open an account with $1 and buy fractional shares. However, very small purchases mean you pay a larger percentage in bid-ask spreads. Starting with $100 to $500 is reasonable for a first purchase.

What is the difference between a market order and a limit order?

A market order buys at the current price, whatever it is. A limit order sets a maximum price and waits until the stock drops to that price or does not execute. Market orders are faster and more certain to execute. Limit orders give you control over price but may not execute at all.

Can I buy stocks on my phone?

Yes. All major brokerages have mobile apps. You can open an account, deposit money, and buy stocks entirely on your phone. The process is the same as on a computer.