How do you buy stock?


Quick Answer

Stocks are typically bought through brokerage houses, both online and in-person, according to the Wall Street Journal. Stocks can also be bought directly through the company.

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How do you buy stock?
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Full Answer

A brokerage house helps investors who deposit money to buy stocks by taking direction as to what types of stocks and how many shares a person wants, according to the Wall Street Journal. Investors pay a fee, or commission, to the brokerage house based upon the number of shares bought. The cost of the brokerage fees varies, with full-service brokers typically charging more than online services. A market order is when an investor chooses to buy stocks at the market rate. A limit order means that an investor wishes to buy a stock only below a certain price.

Some brokers require a minimum purchase amount when investors buy stocks, according to NASDAQ. In place of a brokerage house, investors may also pursue a direct stock purchase plan although these may also require a minimum investment. NASDAQ suggests buying stock in sufficiently large quantities to minimize the amount of transaction fees.

A full-service broker assists investors in choosing which stocks to buy and in what quantities, according to CNN Money. Investors can place a stop-loss order to sell stocks when they fall to a certain level to avoid or minimize losses. Discount brokers provide less or no assistance in stock selection.

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