The Process of Buying & Selling

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How to Buy Stock

When you identify a stock you would like to purchase, you first will need to either set up an online brokerage account (through a company like eTrade) or speak with a broker. Both options will charge you a fee for their services, but brokers are often more expensive. After you know the stock and the price it is selling at, and how many shares you want to buy, you can place an order through your brokerage account or broker directly. Then your order will be processed at that price, and you will get a confirmation that you own the number of shares you just purchased. Over time, the value of the stock will fluctuate, and you will be able to release that stock for sale at any point you feel comfortable.

How to Sell Stock

Selling a stock is similar to buying a stock. Once you have identified what stock you want to sell, and how many shares of that stock you would like to sell, you again contact your broker or go to your online brokerage account. You instruct that person or program to sell the stock, and you will then be credited with the total price of that sale, minus any broker fees. You can also instruct your broker or online brokerage program to sell that stock once it reaches a certain price.

The Significance of Stock Trading

Buying and selling stock is important to helping drive markets around the world. The more times a stock is sold by its owners, the more the price will be driven down. This is often caused by a fear in the marketplace that the company is in financial trouble, and people may begin to "dump" stock to get as much money as they can before it loses value. In addition, owning a stock at just the right time—perhaps before a big company announcement or restructuring—may yield a very high rate of return.

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