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How to buy and sell stocks online
Consider fees, platform features and risks before you get started.
Thanks to online stock trading platforms, buying and selling shares of company stock is easier than ever before. Here’s how to open a brokerage account to start buying and selling stocks on major US stock exchanges and around the world.
Selecting an online stock trading platform, also called an online brokerage account, can be challenging. Why? Because there are dozens of platforms available with various features, fees and benefits to consider.
There’s no shortage of online brokers to choose from, so start narrowing down your options by considering the following:
- Commission fees. Luckily, most US brokers have eliminated commission fees on stock trades, but you may encounter commissions when trading mutual funds, options or futures. Commissions can be charged as a flat fee or a percentage of the total transaction cost.
- Account fees. Brokers charge all kinds of additional fees to use their platform. The one you’re most likely to encounter is an account transfer fee — typically between $50 to $75 — which brokers charge when moving funds out of your account.
- Tradable securities. Some platforms offer access to US-listed stocks and ETFs, while others — like Fidelity — offer access to international exchanges. What do you anticipate trading, both now and in the future?
- Research tools. The more active your trading style, the more technical and complex your research. Explore research tools across multiple trading platforms to make sure the brokerage you select can cater to your needs.
- Experience level. Some stock trading platforms are designed with casual investors in mind. Others are designed for advanced traders and expect new account holders to hit the ground running with little instruction. If you’re new to the world of trading, opt for a platform that’s easy to navigate and rich in educational resources.
- Customer support. Find out how to contact customer service, whether by phone, email or live chat.
Compare online trading platforms
*Signup bonus information updated weekly.
Opening an account is usually free, but some providers may charge subscription or ongoing fees for premium features like market research.
When you open an online, expect to provide the following information:
- Your name, address, date of birth and contact details
- Your Social Security number
- Proof of ID
- Linked bank account details
Most platforms require a minimum deposit to open an account. Once approved, it’s time to start trading.
WATCH: How to Buy Stocks Online: Step-by-Step Guide
Start researching stocks that match your investment goals. To help you make an informed decision, explore market research, analyst ratings and any trading recommendations your platform has to offer.
You’ll also want to consider the number of shares you want to buy — a number that largely depends on your budget and your investment goals. Many platforms require you to buy full shares, but fractional shares — an actual fraction of a single share — are becoming increasingly popular.
Stock screeners can help you narrow down your stock options by sector, industry, price range and more. You can search for companies by name or ticker symbol and if you’re on the fence about a purchase, you can add a stock to your watchlist to keep an eye on its performance.
How many shares should I purchase?
The ideal number of shares for your portfolio depends on your skill level and your investment goals. And while there’s no one-size-fits-all approach to investing, most US investors tend to hold between 10 to 30 different stocks. New investors typically hold fewer stocks, while experienced traders may feel comfortable monitoring a wider range of securities.
|Available asset types||Stocks|
|Stock trade fee|
|Option trade fee|
|Annual fee||$99 per year|
There are two ways to purchase stock: a market order or a limit order.
- Market orders. Place a market order when you want to buy a share immediately at the best price currently available. This method can be risky, though, especially if prices are volatile.
- Limit orders. Place a limit order to set a maximum purchase price for your order. If that price becomes available within your specified time period, your trade is executed. Limit orders also have their risks — because if the stock never hits the price you specify, your order won’t be executed and you’ll miss the opportunity entirely. You can generally set your order for the day or until you decide to cancel it.
Once you’ve entered the specifics of your transaction, including the type of order you’d like to execute and the number of shares you’d like to purchase, submit the order.
You need sufficient funds in your online trading account to cover the cost of the transaction, including any brokerage fees that apply.
Most online trading platforms require you to link a bank account to deposit money to invest, and it often takes two or three business days for that deposit to clear. However, some brokerages allow “instant deposits” that make it possible for you to invest the deposited amount right away while the deposit is processed. Credit cards are typically not permitted as a brokerage account funding method.
Once a stock is in your portfolio, you are considered a company shareholder. And you can either hold onto a stock, or you can sell it.
Buy-and-hold investors hold onto stocks in the hopes that they will eventually increase in value. They may hold a stock for months — even years — before they eventually sell it at a profit.
Active investors, on the other hand, may offload a stock quickly. Day traders engage in intraday trading, which involves buying and selling a stock over the course of a single trading day. Active traders aim to take advantage of minute changes in a stock’s price. This type of trading is complex, fast-paced and requires a comprehensive understanding of the market. It’s not a suitable trading strategy for beginners.
Ultimately, what you do with the assets in your portfolio depends on your investment goals, your trading strategy and your risk tolerance. Keep track of the performance of your investments by logging into your trading account.
When you decide to sell your shares is up to you, but most investors aim to sell shares at a profit — ideally, at the point in time in which it will be most profitable.
What makes stock trading difficult — and risky — is that it’s impossible to predict when or if selling a stock will be profitable. As an investor, you have no control over the market and stocks can be volatile.
A stock’s price may increase in value day-over-day, month-over-month, only to fall back to its initial trading value months after you make a purchase. And while stock prices are generally tied to the performance of the company they belong to, they can also fluctuate for a variety of other reasons, including political shifts, economic patterns, industry events and much more.
The right time to sell your shares boils down to your investment style and risk tolerance. But you’ll also need to factor in the type of stock you’ve purchased and its past performance. Does the stock come from a newer company with a history of high volatility? Or is it from a well-established company with steady gains and reliable dividends?
Factor in the type stock you hold, its past performance, analyst ratings and market news before you sell shares.
- Flexibility. Most platforms are free and allow you to trade from anywhere with an Internet connection.
- Multiple asset classes and trading methods. Trade thousands of stocks, bonds, ETFs and other assets using methods like options contracts, swaps and futures.
- Tools. There are all sorts of resources, tools and indices that can help you understand the ins and outs of online trading.
- Real-time updates. Monitor asset prices and stock market news from your phone, tablet or laptop.
- Instant trades. Transactions are completed almost instantly, allowing you to trade on the go and keep up with the markets.
- Low cost. Many websites and platforms will only charge a commission fee, allowing you to keep more of your earnings.
- Unbiased trading. Online trading allows you to do your own research and trades, meaning you won’t be influenced by brokers or financial advisors who are after a commission.
- Risk. Stocks, foreign currencies and other assets are volatile and tough to predict, so there’s no guarantee that you’ll earn money or break even. And while all forms of trading carry risks, certain types, like day trading, are especially risky for beginners.
- Fees. While fees may seem low, you’ll pay commission on every trade, which can quickly add up. Plus, sign-up fees, transaction fees and other charges are not unheard of.
- No learning curve. Besides your research and intuition, there’s nobody telling you how to trade. You’ll need to practice to better understand online trading, otherwise, you risk losing your money.
- Easy and addictive. Since making a trade is as simple as opening an app or visiting a website, it’s easy to get hooked on online trading. And if you aren’t seeing the returns you expected, you may be tempted to put more of your money at risk.
- Internet dependent. You’ll need an Internet connection to trade online, so if that fails, you could miss out on trades or important information.
- Scams. Watch out for unsolicited offers to invest your money or platforms that claim to be stacked in your favor — there’s usually a catch.
What are the benefits of online trading?
There was a time when all trading was done through brokers, which made it tough to get into if you didn’t have the money, time or connections. Today, there are all sorts of online trading platforms and apps that offer benefits that were unheard of 20 years ago. Some of the benefits on online trading are:
What are the risks of online trading?
Online trading allows almost anyone to start investing, but that doesn’t guarantee that you’ll earn money. Just like any other investment, there are a few things to watch out for:
There are numerous ways to buy and sell stocks online. But before you dive in, compare trading platforms, research the companies you want to invest in, learn about your investing options and plan out both your entry and exit points. And be prepared to follow your plan — even if emotions tell you otherwise.
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