Buying stocks is not hard, but the process has its own rules, its own language and a special cast of characters.

Who’s Who
Although individual investors typically use the term "broker" to describe the professionals who buy and sell stocks, the financial markets use other, less widely recognized titles to describe the ways securities change hands and the people behind the scenes who execute the orders. Of course, these days, much of what was once handled by humans is now accomplished electronically.

• Investment Representatives handle buy and sell orders placed by individual and institutional clients, in return for a fee. With the growth in electronic trading, the order execution part of the IR’s job is now handled on a lower cost basis, electronically.
  
  
• Dealers buy and sell securities for their own or their firm's account rather than for a client. For example, if you want to sell shares, a dealer might buy them for the firm. Dealers make their money on the difference between what they pay to buy a security and the price they can achieve for selling it. Frequently dealers are also described as broker-dealers, since they may fill both roles.
  
  
• Investment bankers, or underwriters, buy new issues of stock directly from corporations and sell them to individual and institutional investors.
  
  
• Traders, also called registered or competitive traders, buy and sell securities for their own portfolios. In this sense, the term is interchangeable with dealer. However, the term "traders" is also used to describe employees of broker-dealers who handle securities transactions for the company and its clients.

Buying and Selling Board Lots
Usually you will buy or sell stocks in multiples of 100 shares, called a board lot. Small investors can buy just a single share, or any number they can afford. That's called an odd lot.

1. Step One - Customer Enters Orders to Buy or Sell

When you instruct your Investment Representative to buy or sell a stock at the best price currently available, which is called the market price, you are giving a market order. The price at which the trade takes place is usually the same or close to the price quoted when you placed the order, depending on how long it takes to handle the order and how actively the stock is traded.

If you think the price of the stock you want to trade is going to change, you can place a limit order, which instructs the Investment Representative to buy or sell only when the stock is at the price you've named, or better.

A stop order instructs the Investment Representative to buy or sell at market price once the stock hits a specified target price, called the stop price. Stop orders are usually placed to limit losses or protect profits. Their downside is that they may be executed at a price higher or lower than the stop price (since the stock trades at the current market price after it hits the stop price).

2. Step Two — Brokerage Firm Receives and Processes Transaction

Some brokers, usually called full-service brokers, provide a range of services beyond executing buy and sell orders for clients, such as researching investments and developing long and short-term investment goals for their clients.

The least expensive way to trade securities, however, is with an online discount brokerage like Qtrade Investor, which provides a wealth of resources to help you make informed investment decisions. Buying or selling independently, online, translates into substantial discounts.

3. Step Three — Stock Exchange Reflects Activity