What Happens if You Buy the Wrong Stock in Your Brokerage Account?

If it happens to you, don't panic.

Buying stocks in a brokerage account has become a pretty easy thing to do these days. That's because many brokerages don't even limit you to full shares of stock. Rather, you're often allowed to purchase shares of stock on a fractional basis so that if a given company's stock is trading for $500 a share and you only have $100 to invest with, you can buy one-fifth of a share instead.

And it's not just individual stocks that can be traded fractionally. It's generally also possible to buy ETFs on a fractional basis.

Meanwhile, many people are in the habit of buying stocks using an app. That's a good thing, to some degree, because it means you can buy stocks on the go. You don't even have to commit to sitting at a desk. 

But when you're buying stocks on the go, you might make a mistake. See, stocks have a ticker or symbol that may or may not be an abbreviation of the company name. And because of that, you might accidentally input the wrong ticker when making a trade.

Coca Cola's ticker, for example, is KO, which may not be what you'd expect it to be. By contrast, Walmart's stock symbol is WMT, which reads more like an abbreviation.

It's more than possible to accidentally enter the wrong stock symbol when adding shares to your portfolio, and boom -- you've bought a stock you didn't want. If you realize your mistake right away, you can simply unload those shares and move on. It's when you don't realize you've made a mistake that you might face some consequences. 

When you realize you've goofed down the road

It's a good idea to review your trade details carefully before hitting the "buy" button on your brokerage app (or whatever button you hit to confirm a trade). But we're all human, and humans make mistakes. So if you wound up purchasing a stock you never intended to, try not to beat yourself up.

Now, let's say you realize a few weeks down the line that you bought the wrong stock. In that case, you can always sell your shares and replace them with shares of the company you wanted to own in the first place. But in doing so, you might face a loss.

Say you bought three shares of the wrong company at $100 apiece. If they're now only worth $90 apiece, you're looking at losing some money. Is it a catastrophic amount? No. But it's a loss nonetheless.

That said, you don't really want to hang onto a stock that doesn't fit your investment strategy to avoid a small near-term loss. In this example, if you feel the company is a bad buy and you hang onto it, you'll risk having its share price plummet to $50, leading to even more losses.

Buying the wrong stock in your brokerage account might also end up benefiting you financially. Let's say that once you realize your mistake, the shares you bought for $100 apiece are now trading for $110. If you sell, you can profit. But in that scenario, you'll be subject to short-term capital gains taxes on your profit, which are taxed at a less favorable rate than long-term gains.

Slow and steady is the best bet

The fact that you can buy stocks while running, stirring a pot of soup, or doing laundry is a good thing -- to a point. But generally, when you're buying stocks, it's a good idea to stop what you're doing and focus for the minute it takes to complete your transaction. Doing so might prevent you from buying shares of a company you don't want.