The basic steps to trade stocks

To trade stocks, you need a brokerage account, money to invest, and a way to place orders. You open an account with a broker (a company licensed to buy and sell securities), fund it with cash, search for a stock by its ticker symbol, decide how many shares you want, and place a buy order. When you want to sell, you do the reverse: select the stock, enter the number of shares, and place a sell order. The broker executes the trade and holds your shares until you sell them.

The entire process takes minutes once your account is open and funded. The hard part is not the mechanics—it is deciding which stocks to buy and when to sell them. That decision is yours alone, and it carries real financial risk.

Key Takeaways

  • You must open a brokerage account with a licensed broker, fund it with cash, and verify your identity before you can place any trades.
  • Stock prices move during market hours (9:30 a.m. to 4 p.m. Eastern on weekdays), and the price you see may not be the price you pay if the market is moving fast.
  • Buying and selling stocks carries the risk that you will lose some or all of your money if the company's value falls.
  • Brokers charge fees or commissions on some trades, though many now offer commission-free stock trades; always check the fee schedule before opening an account.

Opening a brokerage account

You choose a broker and apply online. The broker will ask for your name, address, Social Security number, employment status, and how much money you plan to invest. This is standard identity verification required by federal law. The application usually takes 10 to 15 minutes, and approval happens within one business day.

Common brokers include Fidelity, Charles Schwab, E-Trade, Robinhood, and TD Ameritrade. Each has different fee structures, research tools, and account minimums (some have none). Compare a few before choosing; the broker you pick will hold your money and execute your trades, so pick one you trust and that fits your needs.

Once your account is open, you link a bank account and transfer money in. The transfer usually takes one to three business days. You cannot trade until the cash has arrived and settled in your brokerage account.

How to place a buy order

Log into your brokerage account and look for a "Trade" or "Buy" button. Enter the stock's ticker symbol (a one- to five-letter code; Apple is AAPL, Microsoft is MSFT). The broker will show you the current price and ask how many shares you want to buy. Enter the number and review the total cost—this is the share price times the number of shares, plus any fees.

You will choose an order type. A market order buys at whatever price the stock is trading at right now; it executes almost instantly but the price may have moved since you looked. A limit order lets you set a maximum price you are willing to pay; it only executes if the stock drops to that price or below, but it may never execute at all. Most new traders use market orders because they are simple and fast.

Review the order one more time and click "Confirm" or "Submit". The trade executes within seconds during market hours. You now own the shares, and they appear in your account. The broker sends you a confirmation email with the exact price you paid and the date and time of the trade.

How to place a sell order

Selling works the same way as buying, but in reverse. Log in, find the stock you own, and click "Sell". Enter the number of shares you want to sell (you cannot sell more than you own). Choose your order type—market or limit—and confirm. The broker executes the trade, and the cash appears in your account within one to two business days (this delay is called settlement).

You can sell part of your position (some of your shares) or all of it. If you sell all your shares, you no longer own that stock. If you sell some, the rest stay in your account. The broker tracks your cost basis (what you paid) and calculates your gain or loss automatically; you will see this on your account statement and will need it for taxes.

Understanding market hours and price movement

The stock market is open Monday through Friday, 9:30 a.m. to 4 p.m. Eastern time. Orders placed outside these hours go into a queue and execute when the market opens. Some brokers offer after-hours trading (4 p.m. to 8 p.m.) and pre-market trading (4 a.m. to 9:30 a.m.), but these sessions have lower volume, wider price swings, and higher risk.

Stock prices change constantly during the day based on supply and demand. If you place a market order, you are agreeing to buy or sell at the current market price, which may have moved between the time you looked and the time your order executes. During fast-moving markets, this difference (called slippage) can be significant. Limit orders protect you from this by setting a price ceiling or floor, but they may not execute if the stock never reaches your limit.

Fees, commissions, and costs

Most major brokers now charge zero commission on stock trades, meaning you do not pay per trade. However, you may still pay other costs: account maintenance fees (rare), wire transfer fees (if you move money out), or bid-ask spreads (the difference between what buyers will pay and what sellers are asking, which the broker captures).

Check your broker's fee schedule before opening an account. Some brokers make money from interest on your cash balance or from payment for order flow (selling information about your trades to market makers). These are legal but worth understanding. If you plan to trade frequently, compare brokers on their total cost, not just commissions.

The risk of losing money

When you buy a stock, you own a small piece of a company. If the company does well, the stock price rises and you make money. If the company struggles or the market falls, the stock price can drop. You could lose part or all of your investment. There is no may provide that a stock will recover, and no insurance on stock losses (unlike bank deposits, which are insured up to $250,000).

New traders often underestimate this risk. A stock can fall 50 percent or more in weeks. Do not invest money you cannot afford to lose, and do not borrow money to buy stocks unless you fully understand the consequences. Many brokers offer margin accounts (borrowed money to trade), but margin amplifies both gains and losses and can result in owing money even after you sell.

Frequently Asked Questions

Do I need a lot of money to start trading stocks?

No. Most brokers have no account minimum, and you can buy a single share of most stocks. If a stock costs $100 per share, you can buy one share for $100 plus any fees. Some brokers offer fractional shares, so you can invest any dollar amount, even $10.

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

A market order buys or sells immediately at the current price. A limit order sets a maximum price you will pay (on a buy) or a minimum price you will accept (on a sell), and only executes if the stock reaches that price. Limit orders are safer but may never execute.

How long does it take to see my money after I sell a stock?

The trade executes within seconds, but the cash settles in your account within one to two business days. This delay is standard across all brokers and is set by federal regulation. You can reinvest the cash immediately, but you cannot withdraw it until settlement is complete.

Can I lose more money than I invested?

On a regular stock purchase, no—your loss is capped at what you invested. If you use margin (borrowed money), you can lose more than your initial investment and owe money to the broker. Avoid margin until you have significant experience.

What happens to my stocks if the broker goes out of business?

Your stocks are held in your name and are protected by law, even if the broker fails. The Securities Investor Protection Corporation (SIPC) insures cash and securities up to $500,000 per account. Your shares belong to you, not the broker.