How to Buy Your First Stock Online
Opening a brokerage account is your first step
To buy stocks online, you need an account with a brokerage — a company that holds your money and executes your trades. You open this account by visiting a brokerage's website, providing your name, address, Social Security number, and employment information, then linking a bank account or depositing money. The whole process usually takes 10 to 15 minutes, though the brokerage may take one to three business days to verify your information before you can trade.
Popular brokerages for individual investors include Fidelity, Charles Schwab, E-Trade, Robinhood, and Webull. Each charges different fees, offers different research tools, and has different account minimums — some have none at all. Once your account is open and funded, you can buy stocks immediately through the brokerage's website or mobile app.
Key Takeaways
- You open a brokerage account online by providing personal information and linking a bank account, which takes 10 to 15 minutes but may require one to three business days for verification.
- Different brokerages charge different fees and have different minimums, so comparing them before you open an account saves money over time.
- Once your account is funded, you search for a stock by its ticker symbol, enter the number of shares you want, and confirm the order in real time.
- Your order executes during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays), and the stock appears in your account within one to two business days.
- You can sell stocks the same way you bought them, and the cash returns to your brokerage account within one to two business days.
Choosing a brokerage that fits your needs
Brokerages differ in three main ways: commission fees, account minimums, and research tools. Most major brokerages now charge zero commission on stock trades, so you pay nothing to buy or sell. However, some charge fees for certain services — transferring money out, closing an account, or using premium research tools — so read the fee schedule before you open an account.
Account minimums vary widely. Some brokerages require $500 or $1,000 to start; others have no minimum at all. If you are starting with a small amount, look for a brokerage with no minimum. Research tools matter if you plan to read earnings reports or track company fundamentals; they matter less if you are buying based on your own research or a financial advisor's recommendation.
Finding and researching a stock before you buy
Before you place an order, you need to know the stock's ticker symbol — a one- to five-letter code that identifies the company. Apple's ticker is AAPL, Microsoft's is MSFT, and Amazon's is AMZN. You can find a company's ticker by searching "[Company Name] ticker" online, or by typing the company name into your brokerage's search box.
Once you have the ticker, read the company's most recent earnings report and financial statements, which are free on the company's investor relations website or on financial sites like Yahoo Finance, Google Finance, or Seeking Alpha. Look at the company's revenue, profit, and debt over the past few years. Check whether the stock price seems reasonable compared to its earnings — a metric called the price-to-earnings ratio, or P/E ratio, which you can find on any financial website. This research takes 30 minutes to an hour per stock and helps you avoid overpaying.
Placing your first stock order
Log into your brokerage account and search for the stock by its ticker symbol. The brokerage will show you the current price, the day's high and low, and recent news. Click "Buy" or "Trade," then enter the number of shares you want. Most brokerages let you buy fractional shares — meaning you can spend exactly $100 even if one share costs $150 — so you are not forced to round up or down.
Review the order summary, which shows the number of shares, the price per share, the total cost, and any fees. Confirm the order. Your trade executes immediately if the market is open (9:30 a.m. to 4 p.m. Eastern time on weekdays); if you place an order after hours or on a weekend, it executes at the market open the next trading day. The stock appears in your account within one to two business days, though you can usually see it in your account immediately after the trade executes.
Understanding market hours and order timing
The stock market is open Monday through Friday, 9:30 a.m. to 4 p.m. Eastern time. Orders placed during these hours execute at the current market price. Orders placed outside these hours — before 9:30 a.m., after 4 p.m., or on weekends — are held and execute at the market open the next trading day, which means the price may be different from what you saw when you placed the order.
Some brokerages offer extended-hours trading, which lets you trade before 9:30 a.m. or after 4 p.m., but prices are less stable and spreads (the difference between the buy and sell price) are wider, so you may pay more or receive less. For most new investors, trading during regular market hours is simpler and safer.
Selling stocks when you are ready
To sell a stock, log into your brokerage account, find the stock in your holdings, and click "Sell." Enter the number of shares you want to sell — you can sell all of them or just some. Review the order summary, which shows the number of shares, the current price, the total proceeds, and any fees. Confirm the order. The trade executes immediately during market hours, and the cash appears in your brokerage account within one to two business days.
When you sell, you may owe capital gains tax if the stock's price went up since you bought it. Short-term capital gains (stocks held less than one year) are taxed as ordinary income. Long-term capital gains (stocks held one year or more) are taxed at a lower rate. Your brokerage will send you a tax form at the end of the year showing your gains and losses, which you report on your tax return.
Keeping costs low and avoiding common mistakes
The biggest cost for most new investors is not fees — it is buying at the wrong price. Avoid placing market orders when the market is about to close or when you are emotional about a price move. Instead, use a limit order, which lets you set a maximum price you are willing to pay. If the stock is trading at $50 and you think that is too high, set a limit order to buy at $48. The order executes only if the price drops to $48 or lower, protecting you from overpaying.
Another common mistake is trading too often. Every time you buy or sell, you pay a bid-ask spread — the difference between what buyers will pay and what sellers will accept — even if the brokerage charges no commission. Buying and holding for years costs far less than buying and selling every month. Finally, do not invest money you will need within the next five years; stock prices move up and down, and you may be forced to sell at a loss if you need the cash.
Frequently Asked Questions
How much money do I need to start buying stocks?
Most brokerages have no minimum, so you can start with $1, $10, or $100. However, fractional shares mean you can invest any amount — even if a stock costs $500 per share, you can buy a fraction of one share with $50. Starting small and adding money over time is a common way to build a portfolio.
Can I buy stocks on my phone?
Yes. Every major brokerage has a mobile app that works the same way as the website. You can search for stocks, place orders, and monitor your holdings from your phone anytime, anywhere. The app requires the same login and security verification as the website.
What happens if the brokerage goes out of business?
Your stocks and cash are protected by the Securities Investor Protection Corporation (SIPC), which guarantees up to $500,000 per account at each brokerage if the firm fails. This protection covers stocks, bonds, and cash held in the account. It does not cover losses from bad investment decisions.
Can I place an order before the market opens?
Yes, but it will not execute until the market opens at 9:30 a.m. Eastern time. If you place an order at 8 a.m., it sits in the queue and executes at the market open, possibly at a different price than you expected. Some brokerages offer pre-market trading, but prices are less stable and spreads are wider, so it is riskier for new investors.
Do I have to pay taxes on stocks I own but have not sold?
No. You owe tax only when you sell a stock and realize a gain or loss. Stocks you hold indefinitely are not taxed until you sell them. However, if a stock pays a dividend, you owe tax on the dividend in the year you receive it, even if you do not sell the stock.