Buying stocks isn’t hard, but the process has its own rules, its own language, and a special cast of characters.

To buy or sell a stock, you usually must open an investment account with a traditional or online brokerage firm, mutual fund company, or bank. Your order is handled by a stockbroker who has passed an exam on securities law and is registered with NASD, formerly the National Association of Securities Dealers, and with one or more states. You may also be able to buy stock directly from the company that issues it through a dividend reinvestment plan (DRIP) or a direct stock plan (DSP). A number of large companies offer DRIPs and charge only a minimal fee to handle your transactions. If you sign up, your dividends are automatically reinvested to buy more shares, and you can make cash purchases as well.

WHAT’S IN A NAME? Though you probably use the term broker to describe all of the professionals who buy and sell stocks, the financial markets use other, more specific titles to describe the ways securities change hands. Brokers handle buy and sell orders placed by individual and institutional clients in return for a commission. A floor broker handles buy and sell orders on the floor of an exchange. Dealers buy and sell securities for their own accounts or the firm’s account rather than for a client. Dealers make their money on the difference between what they pay to buy a security and the price they get for selling it. Traders, also called registered or competitive traders, buy and sell securities for their own portfolios. The term trader also describes those employees of broker-dealers who handle the firms’ securities trading. Submitted by Delores Martini, D. Martini & Associates, for more information call 805-934-5244.Delores Martini is a registered representative with, and securities offered through, LPL Financial, Member FINRA/SIPC. Investment advice offered through D. Martini & Associates, a registered investment advisor and separate entity from LPL Financial. CA Insurance Lic#0A08073