how to purchase stocks on your own: Guide

How to purchase stocks on your own

Buying stocks independently—often called self-directed investing—means you decide what, when and how much to buy, using a brokerage or direct plan to execute trades. This guide explains how to purchase stocks on your own, the steps you should follow, required prerequisites (basic financial literacy, a funded brokerage or direct plan, and an understanding of risk), and practical tools to get started safely.

Overview of stock ownership

A stock (also called a share or equity) represents partial ownership in a company. Owning shares makes you a shareholder with certain basic rights, which typically include:

• Voting rights (commonly for common shares) on key corporate matters.
• The potential to receive dividends when companies distribute profits.
• Exposure to capital appreciation (or depreciation) as the company’s valuation changes.

There are two common classes of shares:

• Common shares: Usually carry voting rights and variable dividends. Common shareholders participate directly in price gains (and losses).
• Preferred shares: Typically pay fixed dividends and have priority over common stock in distributions and liquidation, but often carry limited or no voting rights.

Stocks trade on regulated exchanges and through broker-dealers that execute trades on behalf of retail investors. When you buy stock, the transaction usually happens via a brokerage platform that routes and executes the order on an exchange or alternative trading venue.

Ways to buy stocks

Individuals can acquire stock through several principal methods. Each has tradeoffs in fees, convenience, and control.

Through a brokerage account

Opening a brokerage account is the most common path for retail investors who want flexibility across many securities. Key steps and options:

• Choose a broker type (discount/online broker, full-service broker, or robo-advisor).
• Complete account application (personal information, tax ID, employment, investment experience).
• Verify identity (KYC) and link a bank account for funding.
• Fund the account via ACH/wire or other transfer methods; some brokers support instant deposits for limited amounts.

Broker roles:

• Execution: placing orders on exchanges and obtaining best execution.
• Custody: holding securities and cash in your account.
• Reporting: providing trade confirmations, monthly statements, and year-end tax forms.

Common account types:

• Taxable brokerage accounts for general investing.
• Retirement accounts (IRAs in the U.S.) with tax-advantaged rules.
• Custodial accounts for minors.

Direct stock purchase plans (DSPPs) and dividend reinvestment plans (DRIPs)

Some companies offer Direct Stock Purchase Plans (DSPPs) that allow investors to buy shares straight from the issuer. Benefits can include lower fees and the ability to buy fractional shares with small dollar amounts.

Dividend Reinvestment Plans (DRIPs) automatically reinvest cash dividends into additional shares (often fractional) of the same company, compounding ownership over time without separate trade tickets.

Buying fractional shares and recurring purchases

Fractional shares let investors buy a portion of an expensive share for a specified dollar amount. This reduces barriers to entry and helps implement dollar-cost averaging through recurring purchases.

Many platforms allow scheduled, automatic investments (weekly, monthly) into chosen stocks or ETFs. These recurring purchases smooths cost over time and reduce timing risk.

Employer-sponsored plans and employee stock purchase plans (ESPPs)

If your employer offers stock purchase benefits, you may acquire company stock via payroll deductions or through an ESPP. Features to watch for:

• Purchase discount (common in ESPPs).
• Specific holding periods and tax rules that change how gains are taxed.
• Potential concentration risk—owning too much of your employer’s stock.

Choosing a broker or platform

Selecting the right brokerage or trading platform matters for costs, available products, tools, and security. Evaluate brokers using these criteria:

• Fees and commissions (many U.S. brokers offer $0 commissions for stock trades, but watch for other fees).
• Account minimums and deposit options.
• Product availability: U.S. stocks, international stocks (ADRs), ETFs, mutual funds.
• Trading tools: order types, screeners, charts, research reports.
• Mobile app quality and user experience.
• Customer service and education resources.
• Security and custody arrangements.
• Regulatory protections (for example, investor protection schemes and broker-dealer oversight).

For Web3 or crypto-native users, consider a platform that integrates traditional equities and digital assets. Bitget offers an exchange platform and Bitget Wallet for users who want unified asset management across Web2 and Web3 environments.

Types of brokers (discount, full-service, robo-advisors)

• Discount/online brokers: Low fees, robust trading platforms, best for self-directed investors who want tools and low cost.
• Full-service brokers: Provide personalized advice, portfolio management and extensive research, usually at higher fees—suitable for investors who want advisory services.
• Robo-advisors: Automated portfolio management using algorithms and ETFs, low-cost and convenient for passive investors or those who prefer set-and-forget strategies.

Choose a broker type depending on whether you prioritize cost, control, or advisory support.

Preparing to buy: research and planning

Before executing any trade, set clear investment goals and a plan. Steps include:

• Define your investment goals (growth, income, capital preservation).
• Determine your time horizon (short, medium, long term).
• Assess risk tolerance—how much volatility you can accept.
• Create an asset allocation strategy across stocks, bonds, cash, and other assets.

Basic research methods:

• Fundamental analysis: review company financial statements, revenue, earnings, margins, balance-sheet strength and cash flow.
• Read company filings (e.g., annual reports, 10-Ks and 10-Qs where applicable).
• Use analyst research and consensus estimates cautiously and as one input among many.
• Employ screeners and watchlists to identify opportunities and track metrics.

Tools such as screeners, watchlists, and news feeds help monitor companies and market developments. Many brokers include built-in research tools and educational content.

Building a watchlist and doing due diligence

A watchlist keeps potential investments organized while you gather information. Key metrics and items to track:

• Price and volume trends.
• Revenue and earnings growth.
• Price-to-earnings (P/E) and other valuation multiples (P/S, EV/EBITDA).
• Debt levels and interest coverage.
• Dividend yield and dividend history (if income is a goal).
• Qualitative factors: business model durability, competitive advantages, management track record and industry trends.

Maintain notes on entry/exit criteria and reasons for owning each position. This record supports disciplined decision-making and avoids impulsive trades.

Placing an order: mechanics and order types

When you’re ready to buy, you’ll complete a trade ticket with the following elements:

• Ticker symbol and market (e.g., NYSE, or exchange as available on your broker).
• Quantity (shares) or dollar amount for fractional shares.
• Buy or sell instruction.
• Order type and time-in-force.
• Account to use (taxable, IRA, custodial).

Primary order types:

• Market order: execute immediately at prevailing market price — fast but without price control.
• Limit order: execute only at a specified price (or better) — price control, but may not fill.
• Stop order: becomes a market order after a trigger price is reached.
• Stop-limit order: becomes a limit order after a trigger price.

Time‑in‑force options:

• Day order: expires at market close if not filled.
• Good-til-canceled (GTC): remains open until filled or canceled (subject to broker limits).

Special order instructions include all-or-none (fill entire order or none) and fill-or-kill (fill immediately in full or cancel). Check your broker’s available order types and behavior, since implementations can vary.

Market vs. limit orders and best execution

• Market orders prioritize speed — they are likely to fill quickly but may execute at an unfavorable price in volatile markets.
• Limit orders prioritize price — they can protect against unexpected price moves but may not fill.

Brokers have a duty of best execution, meaning they must seek the most favorable terms reasonably available under prevailing market conditions. Brokers may route orders to different venues; some routing arrangements involve payment for order flow — a disclosure to review with your broker.

Advanced order types and strategies (brief)

More experienced traders use tools like stop-loss orders, bracket orders (a primary order with attached profit target and stop-loss), and conditional orders to automate parts of trade management. For most beginners, mastering basic limit and market orders and position sizing is sufficient.

Settlement, custody, and recordkeeping

After a trade executes, settlement is the process by which ownership transfers and cash settles. For many U.S. equities the standard settlement cycle is T+1 (trade date plus one business day). Older references may cite T+2; confirm with current regulatory rules and your broker.

Brokers custody your assets and provide:

• Trade confirmations immediately after execution.
• Periodic account statements.
• Tax documents listing proceeds, cost basis and dividends (e.g., Form 1099 series in the U.S.).

Maintain records of trade confirmations, statements and tax forms to support accurate tax reporting and cost-basis calculations.

Costs and fees

Typical costs to consider when you buy stocks on your own:

• Commissions: many brokers now offer $0 commissions for U.S. stock trades, but international trades may carry fees.
• Exchange and regulatory fees: small per-trade fees assessed by exchanges or regulators.
• Spreads: the bid-ask spread is an implicit cost, especially in less liquid securities.
• Margin interest: borrowing costs when using margin.
• Account maintenance, inactivity or transfer fees (ACAT) — check broker policies.
• Payment for order flow: an arrangement where brokers receive compensation for routing orders to certain market makers; disclosed by brokers and a possible conflict of interest.

Always read fee schedules and disclosures — low headline commissions can be offset by other costs.

Using margin and leverage

Margin accounts let you borrow against securities to increase buying power. Key points:

• Margin amplifies gains and losses; losses can exceed your initial capital.
• Brokers set initial and maintenance margin requirements; if account equity falls below maintenance, you may face a margin call to deposit funds or liquidate positions.
• Before trading on margin, understand interest rates, margin rules and total exposure.

Leverage should be used cautiously and typically avoided by beginners.

Taxes and reporting

Tax rules vary by jurisdiction. This section summarizes common U.S.-style rules as examples — consult a tax professional for personal tax guidance.

• Capital gains: profits from selling assets are taxed as short-term (held one year or less) at ordinary income rates, or long-term (held more than one year) at preferential long-term rates.
• Dividends: qualified dividends may be taxed at lower capital gains rates; nonqualified dividends taxed as ordinary income.
• Wash-sale rule: disallows a loss deduction if you buy a substantially identical security within 30 days before or after selling at a loss.
• Reporting forms: brokers typically issue 1099-B, 1099-DIV and other forms documenting proceeds and dividends.

Keep detailed records of purchase dates, quantities, and cost basis for each lot for accurate reporting and to enable tax-lot specific methods (FIFO, LIFO, specific identification).

Risk management and portfolio maintenance

Effective risk management and ongoing portfolio maintenance help protect capital and meet long-term objectives.

• Diversification: spread investments across industries, sectors and asset classes.
• Position sizing: limit any single holding to a percentage of total portfolio value.
• Rebalancing: periodically adjust holdings to maintain target allocation.
• Use stop-losses or alerts—but avoid knee‑jerk reactions to short-term volatility.

Adopt a written investment plan that clarifies objectives and rules for adding or trimming positions.

Investor protections and regulatory considerations

Retail investors benefit from regulatory oversight and protections:

• Broker-dealers are regulated entities and must comply with securities laws and self-regulatory organizations.
• In certain jurisdictions, investor protection schemes provide limited coverage if a brokerage fails (for example, brokerage custody protection up to a stated amount). Confirm your broker’s protections and coverage.
• Check broker credentials and disciplinary history through official tools (e.g., a regulator’s broker-check service).

Always be wary of high-pressure solicitations and offers that promise unusually high or guaranteed returns—these can be signs of fraud.

Common pitfalls and beginner mistakes

Frequent mistakes to avoid when you attempt to purchase stocks on your own:

• Insufficient research: buying on hearsay or headlines without understanding fundamentals.
• Overtrading: excessive buying and selling increases costs and often reduces returns.
• Chasing hot tips: buying at peak prices due to hype.
• Ignoring fees and taxes: which can erode net returns over time.
• Misuse of margin: taking on leverage without understanding risks.

Practical tips: keep a watchlist, limit position sizes, stick to a plan, and use dollar-cost averaging.

Practical step‑by‑step guide (concise)

A checklist to follow when you want to purchase stocks on your own:

1. Assess financial goals, time horizon and risk tolerance.
2. Choose the appropriate account type (taxable, retirement, custodial).
3. Select a broker or platform that fits your needs (consider Bitget for unified asset options and Bitget Wallet for Web3 integrations).
4. Open and verify your brokerage account.
5. Fund the account using the recommended bank transfer method.
6. Research target stocks, build a watchlist and set entry criteria.
7. Place an order using the appropriate order type (limit for price control, market for immediate execution).
8. Confirm execution and monitor settlement.
9. Record trade details for tax and performance tracking.
10. Periodically review holdings and rebalance according to your plan.

Advanced topics (overview)

As you gain experience, you can study advanced areas that complement stock ownership:

• Options: for hedging or income strategies — complex and involve specific risks.
• Short selling: borrowing shares to sell with the aim of buying back cheaper — carries unlimited downside risk.
• Algorithmic trading: automated strategies using rules or models.
• Tax-loss harvesting: realizing losses to offset gains for tax efficiency.
• ETFs and index investing: diversified approaches that can replace single-stock concentration.
• International equities: exposure to global markets with different trading hours, rules and tax implications.

These topics require additional study and, often, experience or professional guidance.

Tools and resources

Helpful tools and resources for do-it-yourself investors include:

• Broker research tools and screeners (available on most broker platforms).
• Financial news sites and market commentary.
• Company filings and regulatory databases for original disclosures.
• Educational centers from reputable brokerages and independent sites.
• Official investor protection sites and regulator resources for fraud prevention and broker verification.

For investors exploring both traditional securities and digital assets, consider a platform ecosystem that supports multiple asset types—Bitget and Bitget Wallet are examples of integrated services for exchange and custody within a single ecosystem.

See also

• Stock exchange
• ETF (exchange-traded fund)
• Mutual fund
• Portfolio diversification
• Brokerage account
• Dividend reinvestment plan (DRIP)
• Margin trading

References and further reading

• As of Dec 26, 2025, according to Hartford Funds in collaboration with Ned Davis Research, their report "The Power of Dividends: Past, Present, and Future" found that dividend‑paying stocks outperformed non‑paying stocks over the period 1973–2024 (average annual return of 9.2% for dividend stocks vs. 4.31% for non‑payers) while showing comparatively lower volatility. (Reported Dec 26, 2025.)

• Broker educational centers and official investor protection resources provide practical, current guidance on account setup, fees and regulatory protections. Always consult your broker’s fee schedule and the regulator in your jurisdiction for the latest rules.

• Company filings and exchange data are primary sources for market capitalization, volume and dividend yields; check official company filings for verifiable metrics.

Note: the Hartford Funds data above is included for factual context only; it is not investment advice or a recommendation to buy any specific security.

Glossary (short)

• Brokerage: a firm that executes buy and sell orders for investors.
• Market order: an instruction to buy or sell immediately at the current market price.
• Limit order: an instruction to buy or sell only at a specified price or better.
• Dividend: a distribution of a company’s earnings to shareholders.
• Capital gains: profit realized when you sell a security for more than your purchase price.
• Settlement: the process and timeline by which a trade is finalized and ownership transfers.
• Fractional share: a portion of a single share bought for a specific dollar amount.
• DRIP: dividend reinvestment plan, which uses dividends to buy additional shares automatically.
• SIPC (or similar protections): a type of investor protection covering certain losses if a brokerage fails — coverage amounts and rules vary by jurisdiction.

Editor notes

• Keep details about settlement cycles, fee schedules and regulatory protections current; rules and timings may change.
• Link platform‑specific instructions (trading tickets, funding methods) to the broker’s live help pages when publishing.
• For jurisdictional tax guidance, recommend readers consult tax professionals.