The first time I bought a stock, I stared at my phone for a solid thirty seconds after tapping “confirm.” The money left my account instantly. The shares showed up a moment later. And I remember thinking: what just happened? Where did the money go? Who did I buy this from? Did some person in an office building just sell me their shares?

I didn’t lose sleep over it, but I also didn’t understand it. And for a while, I didn’t care. The number in my account went up or down, and that was all that mattered. But then I placed a trade once and the price I got was different from the price I saw on screen. Not by a lot. A few cents per share. But it was enough to make me wonder what was going on under the hood.

If you’ve ever bought a stock or ETF and felt like you were just trusting the app to do the right thing, this is the guide I wish I’d read first.

The basics: you’re buying from another person

When you buy a stock, you’re not buying it from the company. Apple doesn’t sell you its shares. You’re buying from another investor who decided to sell. Your brokerage connects you to a marketplace (a stock exchange, like the TSX in Canada or the NYSE in the U.S.) where buyers and sellers are constantly posting prices.

Think of it like a giant flea market. Sellers put up signs saying “I’ll sell this for $50.” Buyers walk around saying “I’d pay $48 for that.” When a buyer and seller agree on a price, a trade happens. Your brokerage is basically the person walking you through the flea market, finding a seller, and handling the paperwork.

The bid, the ask, and the spread

Before you place a trade, there are two prices floating around for every stock. The bid is the highest price a buyer is currently willing to pay. The ask is the lowest price a seller is currently willing to accept. The gap between them is called the spread.

For a popular stock like Royal Bank or Apple, the spread is usually tiny. Maybe one cent. For a smaller, less-traded stock, the spread could be ten, twenty, or even fifty cents wide. That gap matters because it affects the price you actually get.

Here’s a quick example:

	Price
Bid (what buyers will pay)	$49.95
Ask (what sellers want)	$50.00
Spread	$0.05

If you’re buying, you’ll generally pay closer to the ask price. If you’re selling, you’ll get closer to the bid. That five-cent spread is a small, invisible cost built into every trade. On a hundred shares, that’s $5. Not life-changing, but worth knowing about.

Market orders: the “just get it done” option

A market order is the simplest type of trade. You’re telling your brokerage: “Buy me this stock right now, at whatever the current price is.” No conditions, no waiting. Just get it done.

Think of it like walking into a store and paying the sticker price. You don’t negotiate. You don’t wait for a sale. You just buy it and leave.

Market orders are fast. For popular stocks during normal trading hours, your trade will go through in seconds. The downside is that you don’t control the exact price. If the stock is moving quickly, you might pay a little more (or a little less) than what you saw on screen a moment ago. For most everyday investors buying well-known ETFs or large Canadian stocks, the difference is negligible. But it’s there.

Limit orders: setting your own price

A limit order lets you name your price. Instead of saying “buy at whatever price,” you say “buy, but only if the price is $49.50 or lower.”

This is more like putting in an offer on a house. You tell the seller what you’re willing to pay, and the deal only happens if they accept. If the stock never drops to your price, the order just sits there, unfilled. You can cancel it anytime.

Order type	What you’re saying	Best for
Market order	”Buy now at the current price”	Popular stocks/ETFs when you want speed
Limit order	”Buy only at this price or better”	When price precision matters to you

Here’s the real-world version of why this matters. Say you want to buy 200 shares of a smaller ETF. The ask price shows $25.10, but the stock has been bouncing between $24.80 and $25.20 all day. A market order would buy at $25.10 (or wherever the price is at that exact second). A limit order at $24.90 would wait until the price dips to $24.90, and only then would it fill. Maybe it fills. Maybe it doesn’t. But you’re in control of the price.

For most people buying popular all-in-one ETFs like XEQT or VEQT, a market order during regular trading hours works fine. The spreads are tight and the prices are stable. Limit orders become more useful when you’re dealing with less liquid investments, larger amounts, or volatile markets.

What happens after you hit “buy”

So you’ve placed your order and it went through. Your brokerage shows the shares in your account. Done, right?

Not quite. Behind the scenes, the trade still needs to settle. Settlement is the process where the actual ownership transfer happens. Your money officially leaves your account, and the shares officially become yours. Think of it like buying a car. You shake hands at the dealership and drive it home, but the title transfer and payment processing happen over the next day or two.

T+1: the one-day wait

In Canada (and the U.S.), stock trades settle on a T+1 basis. The “T” stands for the trade date, and the “+1” means one business day later. So if you buy shares on a Monday, the trade settles on Tuesday. If you buy on a Friday, it settles the following Monday.

Before May 2024, settlement was T+2, meaning it took two business days. The switch to T+1 was a behind-the-scenes improvement that most people didn’t even notice.

What does this actually mean for you? In practice, not much. Your brokerage handles the settlement process automatically. The shares show up in your account right away, and you can usually sell them before settlement even completes. But there are a couple of situations where T+1 matters:

If you sell shares and want to withdraw the cash, you typically need to wait until settlement before the money is available to transfer out. So if you sell on a Monday, the cash settles Tuesday, and then your brokerage processes the withdrawal from there.

If you’re buying with unsettled funds, some brokerages let you trade immediately with proceeds from a recent sale, while others make you wait. This depends on your brokerage and account type.

For most people who are buying and holding, settlement is invisible. Your brokerage handles it. You never interact with it directly.

The full timeline of a trade

Here’s what a typical buy looks like from start to finish:

Step	What happens	When
1. You place the order	You choose a stock/ETF, pick market or limit, and confirm	Seconds
2. Order reaches the exchange	Your brokerage sends the order to the stock exchange (TSX, NYSE, etc.)	Milliseconds
3. Order gets matched	A seller’s order matches your buy order, and the trade executes	Seconds (market order) or longer (limit order)
4. Confirmation	Your brokerage shows the shares in your account and sends a confirmation	Seconds to minutes
5. Settlement (T+1)	Ownership officially transfers, money officially moves	Next business day

A few things Canadians should know

Most Canadian brokerages make this seamless. Whether you’re using Wealthsimple, Questrade, or one of the big bank platforms, the buying process is almost identical. You search for a ticker, pick the number of shares, choose your order type, and confirm. The mechanics we just covered are all handled in the background.

Fractional shares are becoming more common. Some brokerages (like Wealthsimple) let you buy a fraction of a share. So if a stock costs $200 per share and you only want to invest $50, you can buy 0.25 of a share. Not every platform offers this, but it’s worth checking if you plan to invest smaller amounts regularly.

Currency matters for U.S. stocks. If you buy a U.S. stock or ETF on a Canadian brokerage, your Canadian dollars usually get converted automatically. But the exchange rate and conversion fee your brokerage charges can add up, especially on larger amounts. This is a whole topic on its own, but it’s worth being aware of.

Trading hours are fixed. The TSX is open from 9:30 a.m. to 4:00 p.m. Eastern Time on business days. You can place orders outside of those hours, but they won’t execute until the market opens. If you place a market order overnight, the price you get could be different from the last price you saw, since the market can gap up or down at the open.

Why this matters even if you “set and forget”

You might be thinking: I just buy XEQT once a month and don’t look at it. Why do I need to know any of this?

Honestly, you probably don’t need to know it day to day. But understanding the basics helps in a few ways. It makes you less likely to panic when something looks off. It helps you read your brokerage statements without confusion. And when someone brings up “spreads” or “settlement” in a conversation, you won’t have to nod along pretending you know what they mean.

Investing doesn’t require you to understand every detail of the plumbing. But knowing enough to be comfortable with what’s happening behind the screen makes the whole experience feel less like a leap of faith and more like something you’re in control of.

What happens to your money when you hit 'buy'