It is easy to get started buying and selling stocks, especially with the advancements in online trading since the turn of the century. If you're like the vast majority of American traders, you buy stocks from an investment firm or a brokerage firm. You meet with or speak with a stockbroker, who accepts your market orders and facilitates payments between you and other trading parties. Unless you are borrowing on margin, you have a cash account with your broker to help identify your investor profile.
You buy at the offer (or ask) price and sell at the bid price. A closer gap in these prices means more trading volume for the stock.
Buy and Sell Orders
Trade lengths, costs and price differences vary between different brokers and among different markets. Stocks tend to be very liquid, meaning that trades happen quickly. When you submit an order to your broker, he either fills it from his company's own inventory or routes the order through a computer trading network. A seller is matched with your order, and the trade is executed.
There are several kinds of orders. The most common are market orders, limit orders and stop orders. Use a market order to buy at the current best market price. Limit orders allow you to set the price, and the order may be filled over a period of time. Stop orders allow you to place ceilings on how much you pay for stocks.
You sell stock in much the same way that you buy stock. Place an order with your broker, and wait for the order to be filled through your investment account.