How Buying Stocks Work -

Behind the scenes, the "price" of a stock is actually two different numbers: The highest price a buyer is willing to pay.

This instructs the broker to buy the stock immediately at the best available current price. It guarantees execution but not a specific price. how buying stocks work

The lowest price a seller is willing to accept.The difference between them is the spread . When you place a market order, your broker matches your request with a seller. In the digital age, this matching happens in milliseconds via high-frequency computers. 5. Clearing and Settlement Behind the scenes, the "price" of a stock

When you decide to buy, you must choose an order type, which tells the broker how to execute the trade: The lowest price a seller is willing to accept

Once the trade is executed, the "settlement" process begins. Currently, most markets operate on a , meaning the legal transfer of ownership and the movement of funds are finalized one business day after the trade occurs. During this time, the brokerage updates your digital portfolio to reflect your new holdings. 6. Ownership and Returns