Getting started
What Is a Brokerage Account? How to Open One as a Beginner
What a brokerage account is, cash vs margin accounts, the fees to watch, and what to check before you open one.
Beginner investing lessons and fake-money practice from the maker of Quoliv.
Quick answer
A brokerage account is the account you use to buy and sell investments like stocks, ETFs, and bonds. You deposit money, place orders, and the broker holds the investments in your name. Most beginners start with a cash account, where you can only invest money you actually deposited.
What you’ll learn
- A brokerage account holds your investments; a bank account holds your cash.
- Cash accounts only let you invest money you've deposited.
- Margin accounts let you borrow to invest, which can magnify losses.
- Check fees: commissions, inactivity, transfer, and currency fees.
- Some applications default to margin, so read the form before you sign.
This explanation is part of our Stocks lessons path, where you can explore the idea in short lessons and quizzes.
What a broker actually does
Stock exchanges don't take orders from individuals directly. A broker is the firm that sends your buy and sell orders to the market and keeps track of what you own.
When you open an account, you'll be asked for ID, contact details, your employment, and questions about your experience and goals. That's normal: brokers are required to know who their customers are.
Cash account vs margin account
| Cash account | Margin account | |
|---|---|---|
| You invest with | Money you deposited | Your money plus a loan from the broker |
| Can you lose more than you put in? | No | Yes |
| Interest charged | No | Yes, on the borrowed amount |
| Good for beginners? | Yes | Usually not |
If you're new, make sure you're opening a cash account unless you deliberately chose margin.
Fees to check before you open
- Trading commissions or per-trade fees.
- Account maintenance or inactivity fees.
- Fees to transfer your account to another broker.
- Currency conversion fees if you buy shares in a foreign currency.
- What happens to cash you haven't invested yet, and whether it earns anything.
Practice first
Opening an account is easy. Knowing what to do once it's open is the hard part. Practicing order types and building a pretend portfolio first means your first real trade isn't also your first time placing an order.
Sources and methodology
This guide was written for education using the primary sources below. It does not evaluate your finances or recommend an investment. Read our editorial policy.