Types of Accounts
There are several types of accounts that most brokers offer. They include …
• Cash accounts
• Margin accounts
• Discretionary accounts
There may be others that are particular to individual brokerages, but they will be variations of one of these three.
A cash account is the simplest type of brokerage account and the first one you will probably open. Online and discount brokers will most likely require you to make a deposit with enough money to cover your trade before they will open your account. Many will place this money in an interest-bearing account until you are ready to trade. When you place a buy order, the broker transfers the money to the brokerage account to cover the trade. When you sell a stock, the ...