How to Buy Stocks and Sell Shares on the Stock Market

A few readers have emailed me regarding the basics of buying and selling of individual stocks along with the accompanied terminology. Even though I’m not a stock trading pro, I have a good few years experience in buying/selling individual stocks so I feel comfortable explaining the basics.

Here are the steps involved with buying and selling shares/stocks:

1. Sign up with a discount brokerage

I have written a discount brokerage comparison that indicates the various costs involved with each broker. I personally prefer to keep my trading costs as low as possible. Trading, maintenance and foreign exchange (FOREX) fees should be accounted for when evaluating how much a brokerage will cost over time. All the brokers listed in the comparison are insured by CIPF (up to $1 million of the trading account is insured).

2. Fund the Account

To fund the trading account, most discount brokerages allow funding via cheque, account transfer and EFT/bill payment from any online banking account. I personally use EFT as I find it the most convenient. After the account is open and funded, the ability to buy/sell stocks in the supported markets should be now available. Some brokerages, like Interactive Brokers, have access to most major public markets in the world.

3. Getting Quotes

After the account is opened, hopefully you’ve already determined which stocks that you are interested in buying. Before buying however, the most recent trading prices must be determined. To do this, enter into the quoting section of the interface which will display last price, bid, ask and volume.

  • Last price: The last price at which the stock traded.
  • Bid: The current highest price per share that a buyer is willing to pay.
  • Ask: The lowest asking price per share that a share holder is willing to sell for.
  • Volume: The number of shares traded during the day.

4. Start Trading

After getting the real time quote of the potential security to purchase or sell, there will most likely be a “trade” button behind which there will be bunch of form fields to fill in to place an order.

Below is a screen shot of the trading page from my Questrade WebTrader account:

Simply fill in the fields indicated and hit the “preview order” button. That will bring the account to a trade confirmation page to ensure that the correct information was entered.

What do all those fields mean? Glad you asked! I have explained them in the next step.

5. Trading Terminology

If you are anything like me the first time trading, you’ll have no idea what all the form fields mean on the trading page.

Security – This is the stock symbol of the company to be potentially purchased/sold. Some brokerages like Questrade will require an abbreviation of the market after the symbol (ie: RIM.TO). Others, like CIBC Investors Edge, will only require the symbol with the market location chosen afterwards in a drop down box.

Order Type – For basic discount brokerages, there are typically 3 types of orders, Market, Limit and Stop.

  • Market Order: When a BUY market order is placed, the ask price is paid, kinda like the “buy it now” button on eBay. Chances are that the order will get filled immediately but often at a higher price than the “last price”. If a SELL market order is placed, the same happens except the shares are sold at the bid price.
  • Limit Order: A limit order is where the price is specified in which to buy/sell the stock to avoid any surprises. The downside is waiting until a buyer/seller hits the limit price which may or may not happen.
  • Stop: This is a little more advanced where the stop price is set for either buying or selling. For example, a stop loss sell order is set to minimize the loss that a trader is willing to take. When the stop price is reached, a market order is sent out at that price. There are also variations to stops such as stop limit orders and various types of trailing stops. These are out of the scope of this article, but I may get into them another time.

Quantity – The number of shares to purchase/sell.

Price – If a limit order is selected, this is the price at which the stock will be purchased/sold IF the market reaches the limit price.

Duration – This is the duration that the order will remain open if not executed immediately. Day will keep the order open until the end of the trading day and Good Till Canceled (GTC) will remain open until manually canceled.

Preferred ECN – Most of the bank brokerages do not allow ECN to be chosen. Even if they do, I always leave it on auto. Brokerages like Interactive Brokers will charge extra if the Auto/Smart ECN routing isn’t selected.

This concludes the very basics of buying/selling stock with an online stock broker. If you have any questions, or anything to add, please leave them in the comments.

Welcome StumbleUpon Visitor! If you enjoyed this article, please take a second of your time to give it a “thumbs up”. Thanks!

I've Completed My Million Dollar Journey. Let Me Guide You Through Yours!

Sign up below to get a copy of our free eBook: Can I Retire Yet?

Posted in


FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.
Notify of

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Inline Feedbacks
View all comments
3 years ago

Hello FT,
I read your blog every night when I come back from work. I am sure just like my previous question, you’ve probably answered this one as well. With an initial investment of $6000CAD, how would you start on the stock market? Is it smart to take advantage of the margin that Questrade gives us to trade with? If yes how would you use that margin?
My plan was to use the 6000 plus half of the margin to do covered calls as well as buy some dividends’ paying stocks and use those two strategies to grow my capital on top of monthly savings. In order to minimize the risk, my plan is to only buy stocks that have had rising trend in the last 5 years.
I fully understand that you are not a professional and that we’re just sharing opinions but I can’t wait to read your answer as well as those from experienced traders and investor.

3 years ago

Hello FT,
just like the other one I read so far, another great article. I think the difference with the way you write is that you are not a professional, and for this reason, you only use words and expressions that most of the people will understand.
My question is this: living in Canada, what types of Questrade accounts would make sense for me? Questrade offers different types of accounts such as Margins, TFSA, RRSP, RESP, etc. why should I choose one and not the other? What are the advantages of having one and not the other? I know what each acronym means, but when it comes to trading/investing, which one should I pick?
I currently have a margin account at Questrade. I can’t tell why I picked that one for the first account. After reading on your site, I am in process of opening a second one, this time a TFSA (I used your referral by the way).
Hope I was not too long.
Thanks in advance for your reply and once again thumbs up for this great website.

3 years ago
Reply to  FT

Thanks, FT for the quick reply. I will read and come back if I have some more questions.

John McKnight
4 years ago

I liked your recomendation on dividend stocks but you missed essential considerations, BROKERS FEES AND TAX.

Stock issued through a stock broker has a cost. Typically a company issues stock and is paid a discount of at least 7% by the stock broker and then the broker resells the stock to retail investors. It is possible to purchase stock directly from many companies (20% of US listed stocks) directly from the company without giving away the first 7% to brokers. Most companies have pension plans which allow this and you do not have to be an employee to participate. Call the administrator and arrange the account. Try Computershare Direct Stock Purchase 1-800-438-6278 as one organization which administrates pension plans for some listed companies.
NET AFTER TAX. The best type of account to hold dividend stocks in is a tax advantaged type of account such as a tax free or RRSP.

4 years ago

Can you use your RRSP to invest in dividend producing stocks? Or are they only meant for long term investments with no pay out dividends?
Then, can I apply the dividend cash pay down LOC debt?

5 years ago

Hi Guys,
I have a question, I made a trade about two months ago – it seems at the time that the shares in question had done a reverse split – consequently the share price went up. The split was not communicated until two days ago. Anyway to cut a long story short, when the price went up that much I sold. I then used the money to purchase a car. Two months later the bank is approaching me saying there was a split etc. What are the implications here – first off the trade was in USD and CAD, so there are currency implications, then there is the cost of the trade and the transfer to USD. Whose fault is this anyway, I made a trade in good faith, the trade itself took 4 days to settle, and the money was in my account for about 3 weeks after that before I transferred it to my checking account. Am I legally obligated to return the money? or the shares? Thanks in advance,!!

Anita Maudhoo
6 years ago

Hi I just opened a Questrade RRSP acct and I am beginner trader. I read your article on the DLR/DLR.U strategy and will be using this in my RRSP acct. This strategy suggest putting a limit order on the ask price for DLR.

Would I employ the same strategy when I am ready to purchase my $US stocks? I am not really sure how to buy and at what price I would put my limit at. Is it somewhere between the bid and the ask? If my price is never reached then do I have to keep placing a new order each day?

Any help would appreciated as I know which stocks I would like to buy but not really sure how to complete the transaction.

7 years ago

-2. Get out of debt.
-1. Do a LOT of research on the stock market and trading option.
0. Do EVEN more research.
1. See your excellent list above!!


james coffee
8 years ago

How much money do you need to start playing at buying and selling stock . I have a cople of thousand I can use , but don’t know if there is a minimum amount of $ needed or if there is a minimun amount of shares that must be bought from each stock company or a ninimun needed if I buy several stocks .

9 years ago

how can we sale shares in open market is there any vendor in middle east (saudi arabia) ?