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How to buy your first stock: A step-by-step guide

What we'll cover

  • How stocks work for investing

  • What to consider when buying stocks

  • Steps to buy a stock online

If you're ready to begin investing — and have a stock in mind to buy — we'll break down exactly how to take the next step of buying your first stock.

What are stocks?

Simply put, a stock is an investment in a publicly traded company. You purchase a share of ownership in that company — a stock. Sometimes referred to as equities, stocks are tradable assets, which means you can buy and sell them on an exchange like the New York Stock Exchange.

Step-by-step guide to buying a stock

Here's how to get started.

1. Open your brokerage account

First, you'll need a brokerage account, through which you can make transactions for stocks, bonds, mutual funds and exchange-traded funds (ETFs). You can use an account like Ally Invest's Self-Directed Trading account.

2. Dig into your stock

Once you have opened a brokerage account, it's time to research your stock. If you really want to dive into the data, reports filed with the U.S. Securities and Exchange Commission, including 10-K and 10-Q reports provide financial details for companies you're considering, including a balance sheet, sources of income, revenues and expenses and a quarterly update on operations and financial results.

You can also do research within your Ally Invest account. Our TipRanks Smart Score tool analyzes stocks and gives each an easy-to-read rating, and you can use our ETF Screener to analyze and compare ETFs. Also consider checking recent news to understand ​a company's reputation and its prospects for the future.

3. Buy your stock

Once you've made your selection and you're ready to make your purchase, log into your account. Most brokerages allow you to buy a stock on their website or via a mobile app. Within the Ally app, you'll select Trade (or QuickTrade on desktop) . There, you can enter the stock symbol (aka ticker) and quantity of shares before previewing your trade tickets and submitting your order. You'll also be able to see how much cash is available in your account.

Most brokerages allow you to buy a stock on their website or via a mobile app. 

Other factors to consider

As you explore your investment opportunities, keep these additional factors in mind.


To help manage risk, diversification is crucial. In addition to stocks, consider rounding out your portfolio with ETFs and mutual funds, which are not based on the success of a single stock.

Are my stock earnings taxed?

When you sell a stock or mutual fund for more than you paid for it (or buy a security for less money than you received when selling it short ), the result is a capital gain. How long you owned the investment before selling it determines how much you pay in capital gains taxes .

Remember to consult with a tax professional if you have specific questions on how your investments are taxed.

How frequently should you buy stocks online?

There's no number of trades any particular investor should make. What's important is that your trading matches up with your investment strategy, risk tolerance and your goals.

That said, day trading consists of two off-setting transactions that occur with the same security on the same day. If you exceed four or more day trades within a rolling five business day period, your account will be labeled as a Pattern Day Trade account and it could be subject to certain limitations based on the account equity (like a requirement to maintain a minimum account equity of $25,000).

Tip: Consider steering clear of or limiting day trades, especially if you're a new investor, so you're not subject to additional regulations.

How does volatility affect the process?

Fluctuation in stock and market prices is known as volatility , which can be measured by comparing current or expected returns against the stock or market's mean (average) and typically represents a substantial positive or negative change.

The VIX, which is sometimes called the “fear index," is what some traders look at when trying to decide on a stock or options trade. Calculated by the Chicago Board Options Exchange (CBOE), it's a measure of the market's expected volatility through S&P 500 index options — and that's just one measure you can use to do your own research. And remember, while it's valuable to look at historical performance, it doesn't guarantee the future.

Now what?

Congrats! You've taken an important first step in your investing journey. By continuing to expand your financial horizons and learning more about the world of investing you can stay on the road to pursuing your financial goals.

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