Part 3 – Accounts, Brokers, and Basic Order Types
1. What is a brokerage account?
To buy and sell stocks, you first need a brokerage account.questrade+1
A brokerage account is an investment account at a financial firm that allows you to deposit money and use it to purchase assets like stocks, ETFs, and funds.investor.vanguard+1
You can usually open and manage this account online through a website or mobile app.investing+1
2. Choosing an online broker
There are many online brokers, and for beginners the most important factors are low fees, easy‑to‑use platforms, and solid educational resources.bankrate+1
Well‑known beginner‑friendly brokers in recent reviews include firms such as Fidelity, Charles Schwab, Robinhood, SoFi, and others, though availability depends on your country.nerdwallet+1
When comparing brokers, pay attention to:investing+1
- Trading costs (commissions and fees).
- Account minimums (the minimum amount of money required to open or maintain the account).
- Tools, research, and educational content.
- Customer service quality and support channels (chat, phone, email).
Choose a broker that matches your experience level and offers clear information in a language and interface you feel comfortable with.questrade+1
3. How to open and fund your account
Opening a brokerage account is similar to opening a bank account, but the broker will ask more questions about your finances and investment goals.questrade+1
You normally provide personal identification, contact details, and information about your income, net worth, and risk tolerance.investor.vanguard+1
After the account is approved, you link a bank account or use another funding method to transfer money into the brokerage account before you can start buying stocks.fidelity+1
4. Basic order types: market and limit orders
When you actually buy or sell a stock, you place an “order” through your broker’s platform.tastylive+1
The two most important basic order types are:investor.vanguard+1
- Market order: An instruction to buy or sell immediately at the best available current price in the market. It usually executes quickly but you do not control the exact price.
- Limit order: An instruction to buy or sell at a specific price or better. A buy limit order will only execute at your limit price or lower; a sell limit order will only execute at your limit price or higher.
Beginners often use limit orders when they want more control over the execution price, especially in volatile markets.tastylive+1
5. Protective orders: stop and stop‑limit
A stop order (often called a stop‑loss order when used to sell) becomes active when the stock reaches a chosen “stop” price.investor.vanguard+1
For example, you might place a sell stop order to reduce losses if the price falls below a certain level.tastylive+1
A stop‑limit order combines a stop order and a limit order.investor.vanguard+1
Once the stop price is reached, the order converts into a limit order at your chosen limit price, giving you more control over the actual transaction price but with no guarantee that it will execute.tastylive+1