Many individuals choose to invest their money in the stock. This is most often done by buying a stock, waiting for it to appreciate in value, and then selling it. Some investors may hold onto a stock for a long period of time, while others may buy and sell the stock frequently. Legally, a person can buy and sell a stock as often as he wishes.
Buying and Selling Stock
Most investors are not legally allowed to trade stocks directly on an exchange. So to do so, they place their orders with a broker. This broker may be contacted by phone, email or on a webpage. When the person places an order with the broker, he is tell him how much of a certain stock to buy or sell and at what price. Legally, there is not limit on how frequently a person can place orders.
While there is not legal limit on how often a person can buy and sell a stock, there may be a logistical one. An order will usually take some time to process, as the broker will have to find a seller. In some cases, the investor will want to buy or sell the stock at a specific price. If the broker fails to find a taker, the order may not clear.
Another limit on the frequency with which a person can buy and sell a stock if that buying and selling stocks is not free. In addition to having to pay for the purchase of stocks themselves, most brokers charge a commission to the buy. This commission can be as low as $5 or $10 a trade, but if the broker is offering financial advice, it may be significantly higher.
The two main factors that determine how often a person can buy and sell stock are expense and speed. If a person has sufficient funds, he can buy and sell stock as often as he likes. He will then be limited only by the speed of his broker. If the person wishes to trade faster, he may choose to pay take his business to a faster broker.
- "Stock Investing for Dummies"; Paul Mladjenovic; 2009