Introduction

Now that you know what a stock is and why it moves, it's time to learn how to actually buy and sell one. This lesson will walk you through brokers, trading platforms, order types, and the mechanics of getting your money into the market.

1. What Is a Broker?

● Definition: A broker is a service that gives you access to the stock market.

● Role: Without a broker, you cannot trade stocks. They act as your gateway.

​● Examples:

○ Robinhood
○ Thinkorswim
○ Tradier
○ Webull
○ Interactive Brokers
○ E*TRADE

● Modern Evolution: Most brokers now offer mobile apps and commission-free trading.

2. What Is a Trading Platform?

● Definition: The software or interface provided by your broker where you can view charts, select stocks, and execute trades.

​● Features:

○ Real-time price tracking
○ Charts
○ Account balances
○ Buy/sell buttons
○ Order history

● Examples:

○ Thinkorswim is a platform provided by TD Ameritrade.
○ Robinhood and Webull have their own integrated platforms.

● Purpose: This is where the action happens—it’s your control center.

3. Funding Your Account

● Process:

1. Link a bank account.
2. Transfer money to your broker account.

● Purpose: You need to deposit funds before making your first trade.
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​● Speed: Some brokers let you trade immediately (e.g., Robinhood), others wait for the money to settle.

4. Order Types: Market vs. Limit

A. Market Order

● Definition: Buys or sells a stock at the best available price right now.

● Use Case: You want to get into or out of a stock immediately.

● Risk: You may get filled at a worse price than expected due to slippage.

​● Example: You place a market order for a stock shown at $19.30—it may fill at $19.40.

B. Limit Order

● Definition: You specify the maximum price you're willing to pay (to buy) or the minimum you’ll accept (to sell).

● Use Case: You only want to trade at your price or better.

● Benefit: Prevents overpaying or underselling.

​● Example: You place a buy limit order at $18.50. If the stock drops to that price, your order is filled. If not, nothing happens.

5. Bid vs. Ask

● Bid: The highest price someone is willing to pay for the stock.

● Ask: The lowest price someone is willing to sell the stock for.

● Spread: The difference between bid and ask. This is the “cost” of liquidity.

● ​Example:

○ Bid = $9.10
○ Ask = $9.25
○ If you hit the ask, you’re buying at $9.25. If you hit the bid, you’re selling at $9.10.

6. Executing a Trade

● Steps:

○ Log into your platform.
○ Choose your stock via ticker symbol.
○ Select your order type (market or limit).
○ Input quantity (number of shares).
○ Click Buy or Sell.

● Optional Settings:

○ Time in force (e.g., day order or good-till-cancelled)
○ Stop loss or take profit levels

7. Paper Trading vs. Real Trading

Paper Trading

● Definition: Practice account using fake money.

● Purpose: Learn mechanics and test strategies risk-free.

● Example: Thinkorswim offers a free paper trading platform.

Real Trading

● Definition: Actual money, real gains and losses.

● Caution: Emotions run higher; risk is real.

8. Fractional Shares

● Definition: Ability to buy less than a full share of a stock.

● Use Case: Buy expensive stocks (like Amazon or Google) with smaller amounts.

● Platforms: Common with Robinhood, Webull, etc.

9. Executions Are Instant

● When you place a market order, the trade usually executes in less than a second.

● You’ll see the updated position in your account immediately.

This wraps up Lesson 2. Now you know how to choose a broker, fund your account, place trades using different order types, and understand the core mechanics of execution. In the next lesson, we’ll show you how to read a chart and understand what price action is actually telling you.