When you buy a stock who are you buying it from?

So when you buy a share of stock on the stock market, you are not buying it from the company, you are buying it from some other existing shareholder. Likewise, when you sell your shares, you do not sell them back to the company—rather you sell them to some other investor.

How does a broker buy a stock?

Brokers buy and sell stocks through an exchange, charging a commission to do so. A broker is simply a person who is licensed to trade stocks through the exchange. A broker can be on the trading floor or can make trades by phone or electronically. An exchange is like a warehouse in which people buy and sell stocks.

What does a broker do when he receives an order for a stock?

A broker is an intermediary who account would first submit a buy or sell order, which then gets sent to a broker. On behalf of the investor, the broker would then decide which market to send the order to. Once the order is in the market and it gets fulfilled, only then can it be considered executed.

When you sell stock Where does the money come from?

1- If a company decides it wants to issue new shares, such as in an IPO or capital raise, then if you buy these shares, the money goes to the company. If you sell them on, however, the money comes from other shareholders. Similarly if a company does a share buyback, obviously they are paying for the shares.

How do you purchase stock in a privately held company?

You can buy shares through a “private placement,” which requires some paperwork from both you and the seller. You can deal directly with a corporation or go through a broker that specializes in private placements. The seller must submit the SEC’s Form D before it can sell you the shares.

Where do stock brokers work?

A stockbroker is a financial professional who executes orders in the market on behalf of clients. A stockbroker may also be known as a registered representative (RR) or an investment advisor. Most stockbrokers work for a brokerage firm and handle transactions for a number of individual and institutional customers.

How do beginners buy stocks without a broker?

It is possible to buy stock without a broker. In fact, there are three alternatives to using a full-service broker: opening an online brokerage account, investing in a dividend reinvestment plan, and investing in a direct stock purchase plan.

How long do I have to wait to buy a stock after selling it?

Stock Sold for a Profit You can buy the shares back the next day if you want and it will not change the tax consequences of selling the shares. An investor can always sell stocks and buy them back at any time. The 60-day waiting period is imposed by the tax rules and only applies to stocks sold for a loss.

What are stock brokers and how do they work?

Stock brokers are people or firms licensed to buy and sell stocks and other securities via the stock market exchanges. Back in the day, the only way for individuals to invest directly in stocks was to hire stock brokers to place trades on their behalf.

How do I buy stocks without a stock broker?

One way to skip out on the services of a stock broker is to go straight to the source and purchase stock from where it originates: the company. Stocks represent ownership of a company, so the company in question is really the one that ultimately controls the supply of available shares, in a certain sense.

What happens when you buy a share of stock?

When you buy a share of stock, you are almost always buying from someone who previously purchased that share and now wants to sell it.

Do stock brokers have direct access to the stock market?

But really, when you buy a share the money goes to whoever you bought it from, and that’s all you can know or need to know. In brief: yes. The broker has direct access to the stock market. You can’t afford that, so you go through them and pay them for the service.