Stocks are bought and sold through a brokerage firm. A brokerage firm, or broker-dealer as it is also called, is a company that buys or sells securities for its own account or for its clients.

You can open a brokerage account in person or online. Depending upon your needs, you must choose between a:

• Full-service broker
• Discount broker

Full-service brokers provide advice on which stocks to buy and sell. If you plan to do your own research and make your own decisions, you might do better with a discount brokerage firm.

To evaluate a brokerage firm, find out more about the following:

• Fees and restrictions for opening and maintaining an account
• Commissions charged for buying and selling investments
• Interest paid on funds in your account
• Record-keeping
• Access to research, stock analysis, and educational resources
• Additional services available such as credit cards and loans
• Customer service

Make sure your broker is licensed and has not been disciplined for misconduct. You should check with the securities regulator in your state and NASD. Either visit NASD's BrokerCheck website or call its toll-free BrokerCheck hotline (1-800-289-9999). You can investigate the background of registered investment advisers online on the SEC website.

Trading Online

When you buy or sell a share of stock, you pay a commission to the broker-dealer that executes your trade. Online trading usually enables you to buy and sell stocks on your own. Generally, you pay a lower commission than you would if assisted by a stockbroker.

FAQs >>