What Is a Stock Account?


The average investor uses a stock account to buy and sell securities. Stock accounts (also called cash or brokerage accounts) differ from trading accounts. Trading accounts manage various investment instruments including stocks, currencies and more.


  • Investors with stock accounts place cash in the account in order to buy and sell stocks, bonds and mutual funds. The stock account remains the most basic investment account type.


  • In accordance with Federal Reserve Board Regulation T, stock account holders must pay for purchased securities within two days of the transaction's execution date.


  • Cash account holders do not risk borrowing money from the brokerage firm to purchase stocks. The account must hold enough cash to cover the purchased amount.


  • The amount of cash in a stock account limits its buying power. Margin accounts use leverage to buy more stock than what the available cash in the account can buy.


  • The increased number of online, discount and bank brokerage firms has increased the accessibility and variety of stock trading accounts.

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