Glossary
Brokerage Account
The account that holds your investments and places your orders on an exchange, opened with a licensed broker.
Ordinary people have no direct line to a stock exchange. A brokerage sits in between: you open an account, move money into it, and instruct the brokerage to place an order on your behalf. The shares are then held in that account under your name.
It is not a bank account, and the distinction matters for how the money behaves. Cash sitting in a brokerage account is yours and can be withdrawn; the shares are yours too, but their value moves every day the market is open, so the account's total is not a fixed balance.
Opening one involves identity checks, because the account is regulated. The other differences between brokerages, what they charge, what they let you trade, and how their app behaves, are the sort of thing worth comparing before opening rather than after.
Learn this properly
Lesson 3: How Buying a Stock Actually WorksBrokerage accounts, what happens in the seconds after you press the button, and order types explained without the jargon.
Related terms
- Market OrderAn instruction to trade immediately at whatever price is currently available, rather than at a price you name.
- Limit OrderAn instruction to trade only at a stated price or better, which may go unfilled if that price is never reached.
- PortfolioEverything you own across your accounts, considered as one collection rather than as separate holdings.
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