How to Buy Your First Stock
Placing an order is telling your broker four things: what you want to buy, how much of it, at what price, and for how long. The broker passes that instruction to a stock exchange, a computer looks for someone willing to sell on those terms, and if it finds one you own the shares. It usually takes seconds.
Learning how to buy your first stock is mostly about the price part of that instruction. It is the only part where you have a real choice, and the part beginners leave on its default setting without knowing what the default does. This guide assumes an account that already exists and holds cash. If that is not true yet, our guide to how to open a brokerage account in Canada covers choosing between a TFSA, an RRSP, an FHSA and a cash account first.
The four things every order needs
You can place an order in person, by phone or online, and you pay a commission each time you buy and each time you sell. However you place it, the Ontario Securities Commission’s guide to buying and selling stocks sets out the same four things it has to specify.
What to buy or sell. The specific company, by ticker symbol and exchange.
How much. The number of shares. Large orders may be asked to accept a partial fill, meaning part executes and the rest waits or expires.
The price you want. This field decides your order type. Take whatever the market offers and you have placed a market order. Name a price you are willing to pay and you have placed a limit order.
How to pay. Cash in the account, or money borrowed on margin, which the OSC flags as more complex and higher risk. One rule removes the choice: stocks in a registered plan such as an RRSP, an RESP or a TFSA are always in a cash account, and investments in a registered plan cannot be bought on margin.
A fifth box gets clicked past. Every order carries a duration, and the OSC states the default plainly: “The order will expire at the end of the trading day unless you specify a longer time limit.”
Market orders and limit orders
The Toronto Stock Exchange publishes the definitions its systems run on. A market order, in the TSX Order Types definition, is “An order to buy or sell that is to be executed immediately at the best available price.” A limit order is “An order to buy or sell at a specified price or better.”
Those last two words, “or better”, are the ones to hold on to. A buy limit can fill lower than the price you named and never higher, so your limit is a ceiling on a purchase and a floor on a sale. That is the protection a market order does not give you.
| Order type | What it does | What you are guaranteed | What you are not guaranteed | When a beginner uses it |
|---|---|---|---|---|
| Market | Executes immediately at the best available price | That it executes, at the best price available in that moment | What that price turns out to be | When filling matters more than the price |
| Limit | Buys or sells at your specified price or better | You will not pay more than your limit on a buy | That it fills at all, and it expires at day end unless you set a longer time limit | When the price matters more than filling |
| On-Stop | Sits undisplayed until the price trades to or through your limit price, then becomes a regular limit order | That nothing happens, and nobody sees it, until it triggers | That it fills once triggered, being then a limit order with a limit order’s risks | Not on a first purchase. It is the order behind a stop-loss sell |
| Odd lot (smaller than a standard trading unit) | Does not trade in the regular order book; a market-making firm’s Registered Trader handles it | A complete fill at the protected best price, when priced at or better than the opposite side’s best price | A partial fill, which odd lots do not get; they trade all or none | Automatically, when the budget buys fewer shares than a standard trading unit |
Order definitions and odd lot handling from the TSX Order Types page. Order duration from the Ontario Securities Commission.
Read the ladder outward from the middle. The market buy does not wait. The limit buy sits below, patient and possibly permanent. The on-stop buy sits above, invisible, waiting for the price to rise into it.
Three shares of Royal Bank, worked through
Royal Bank closed at $292.37 on September 3, 2026 (Yahoo Finance). Say the budget is $1,000.
| Step | The arithmetic | What it means |
|---|---|---|
| Shares the budget buys | 3 x $292.37 = $877.11 | $122.89 of the $1,000 goes unspent |
| Why not one more | 4 x $292.37 = $1,169.48 | Over budget, so three shares it is |
| Market buy, $10 commission | $877.11 + $10 = $887.11 | Cash out, filled at whatever the market offers |
| What the commission costs | $10 / $877.11 = 1.1% | The position starts 1.1% behind |
| Limit buy at $290.00 | 3 x $290.00 = $870.00 plus commission | Fills only if the price comes down to $290.00 or better, and expires unfilled at day end if it does not |
| On-stop buy at $295.00 | Nothing until triggered | Rests undisplayed, triggers if the price trades up to $295.00 or through it, then becomes a limit order |
| Round trip at $30 each way | $30 + $30 = $60, and $60 / $877.11 = 6.8% | Buying and selling costs 6.8% of the position before the stock does anything |
Share price as of September 3, 2026, from Yahoo Finance. The $290.00 limit and $295.00 on-stop prices are chosen for this example. The $10 and $30 commissions sit inside the discount brokerage range the OSC publishes.
The last row is not an argument against buying. It is an argument against buying and selling often. Whether Royal Bank is worth owning is a separate question from how to place the order, and our page on the best Canadian bank stocks is where that analysis lives, RY included.
On-stop orders, and what they are for
The third type is what brokers surface as a stop or stop-loss order. The TSX calls it an On-Stop order: “A limit priced order which resides undisplayed in the On-Stop book until its limit price is ‘triggered’ at which time it becomes a regular limit order in the Continuous Limit Order Book (CLOB).”
Before the trigger it is not in the visible market at all. After it, the order is an ordinary limit order with every limitation of one, including never filling. A sell triggers when prices trade down to or through the limit price; a buy triggers when they trade up to or through it. On the TSX the trigger price and the limit price are the same number, though broker platforms often let you set them separately as a stop-limit order, so check which yours is offering.
What happens after you click
Your order joins a queue whose rules sit in securities law rather than with the exchange. The Order Protection Rule, defined in National Instrument 23-101, “requires all visible, immediately accessible, better-priced limit orders to be filled before other limit orders at inferior prices, regardless of the marketplace where the order is entered.” A better price is served first, and nobody offering a worse one jumps ahead of you for being bigger or faster.
Timing is the other half. Continuous trading runs 9:30 AM to 4:00 PM ET. From 7:00 to 9:30 AM the exchange is in its Pre-Open session, where “Orders may be entered, but will not be executed.” At 9:30 the Market on Open executes all matching orders at a single opening trade price, so an order placed the evening before does not fill at last night’s closing price. It waits for that auction. The queue, the auction and the order book behind all of this are the subject of our guide to how the stock market works.
Once it fills you receive a record confirming what you bought or sold, the price you paid and the commission you paid. There is no paper certificate; the firm keeps records electronically. The OSC’s instruction is worth following every time: “Read your order records carefully. It’s up to you to report any errors in your order.”
Keep that record for a second reason. Price paid plus commission paid is what your adjusted cost base is built from, and that is what the Canada Revenue Agency wants the day you sell in a non-registered account. Our adjusted cost base calculator handles it across multiple purchases, which is where it gets fiddly.
The shares are yours before the paperwork finishes. Canadian trades settle T+1, so cash and shares change hands one business day after the trade, a timetable the Canadian Capital Markets Association coordinates.
A three-share order is not second class
New investors worry an order this small will be ignored or broken into pieces. On the TSX the opposite is true. An order this size is an odd lot: “Orders with volume less than a standard trading unit are considered Odd Lot and do not trade in the regular Central Limit Order Book (CLOB).” Market-making firms and their Registered Traders execute them automatically, and the obligation is explicit. “The RT automatically guarantees a complete fill at the Protected NBBO for Odd Lot orders priced at or better than the opposite side’s best price.” So a marketable odd lot gets a complete fill rather than a partial one, because odd lots trade all or none, and it gets that fill at the protected best price.
What it actually costs
Commission is charged on the way in and on the way out, and the Canadian range is wide. The OSC’s figures: full-service accounts charging commission typically run $75 to $100 each time you buy or sell, fee-based accounts typically charge 1 to 2% of account value per year instead, and among discount brokerages, “Typical fees range up to $30 each time you buy and sell, but some start as low as $5.”
The OSC’s own example uses round numbers. Invest $1,000 and make $80 when you sell, and the return is 8%. Pay a $10 commission on the sale and you keep $70, so the return is 7%. One commission, on one side of one trade, took an eighth of the gain. Applied to the Royal Bank position: at $10 it starts 1.1% behind, and at $30 each way a round trip costs 6.8% of $877.11. Comparing what Canadian platforms charge is the job of our roundup of investing apps in Canada.
The mistakes that cost money
Queuing a market order overnight. Someone decides after dinner to buy at the price on the screen, places a market order and assumes that price is what they pay. Orders entered before 9:30 AM are held rather than executed, and the Market on Open fills everything matching at one price nobody knows in advance. If last night’s price is what matters, a limit order enforces it.
Trading more often than the commissions allow. A round trip at $30 each way costs 6.8% of an $877.11 position whether the trade was a good idea or not. Small accounts feel it hardest, because a fixed fee sits on a small base.
Not reading the confirmation. The record shows what was bought, at what price and with what commission. Checking it takes under a minute, and it is the one moment when an error is cheap to fix. Reporting a mistake in your order is your responsibility, not the firm’s.
Where to go next
The mechanics come down to a checklist. Decide what you are buying and how many shares the budget supports. Choose market if execution matters most or limit if price matters most, and check the duration either way. Confirm you are paying with cash rather than margin. Place it during continuous trading hours if you want to execute at a price you can see. Then read the confirmation and file it.
The harder question is what to buy, which this guide leaves alone. Our researched Canadian stock picks are organised by the kind of investor asking, which beats a ticker someone mentioned in passing.
The order ticket also assumes you can read the screen behind it. Our guide to reading a stock quote takes every field in turn, bid, ask and the spread included, and rebuilds the P/E and dividend yield on this same Royal Bank quote from the bank’s own filing.
One habit to take with you: the rules above are published by the exchange your order goes to and by your provincial securities regulator, in plain language and free. Reading the document that defines an order type or a fee costs nothing next to learning how that order type behaves by watching it happen to your money.