The most common path to buy and sell stocks is through a stockbroker. Types of brokers range from full-service brokers with an office in your hometown to online discount brokers where stock purchases and sales are done over the Internet. Some companies offer direct-purchase plans for investors to buy stock without going through a broker.
Stockbrokers charge a commission to both buy and sell shares of stock. The lowest-cost brokers are the discount online brokers like E-Trade, Charles Schwab and Fidelity. These brokers charge $7 to $10 per trade to buy or sell any number of shares of a particular stock. A stock trade is a one-time order to buy or sell. For example, if an investor bought 100 shares of IBM today and another 100 shares tomorrow, that would be two trades and the investor would pay two commissions.
Most discount brokers charge their lowest advertised commissions only on trades that are placed through the brokers' online order systems. If an investor needs help placing a trade or wants to talk to a live broker, the cost is significantly higher. As an example, TD Ameritrade charges $9.99 for an online stock trade, $34.99 to trade using the company's interactive telephone system and $44.99 to place a trade with a live broker
Full-service stockbrokers help their customers select the stocks that fit their investment goals. These brokers do not publish their stock commission rates, but they will be significantly higher than with a discount broker. A Motley Fool article indicated full service broker stock commissions can be in the range of $150 per trade. A broker will negotiate rates for his best customers.
Many companies offer plans for investors who want to purchase stock in the company without using a broker. These plans are called direct purchase -- DPP -- or dividend reinvestment plans -- DRiPs. The direct purchase plans will have very low or no fees for investors who want to make a regular monthly investment into a particular stock. These plans will also automatically reinvest any dividends earned from the stock into more shares at no charge. Each direct purchase plan has a different fee structure for the cost of buying and selling shares.