A stock market broker is a licensed investor on their own right or a trader. They either work for a company or on their own or can invest in the stock market for individual investors or corporations.
Only members of the stock exchange can conduct transactions, and even if you want to trade online, you will still need a broker because individuals do not have access to the electronic markets.
Investor needs
The specific needs of the investor are the first consideration in the choice of a stock market broker. If you as the investor want to receive advice on which stocks to buy or to sell and yet are uncomfortable with making trades on the internet, you need to hire a full-service broker.
On the other hand, those investors who are confident and knowledgeable to make their own trading decisions are better off with discount brokers.
Competitors
When finished with deciding on the type of broker you want to hire, you as the investors are advised to compare a few competitors in order to find out if there are significant differences in costs.
This is significant because you may want to hire your broker for a number of trades to be made. Other pertinent details would include the amount of cash to be deposited, the type of margin accounts to be used, and the kind of services to be rendered.
Qualifications
Stockbrokers in the U.S. must first take Series 7 and Series 63 examinations in order to receive their stockbroker license. Beginners in the business of stock brokerage must first learn the market.
Many expert brokers first started out spending long hours on the phone building up their client base. These expert brokers have expanded on the success of their former customers.
The key point here is credibility because stockbrokers often advise their clients on the best and most suitable investments.
Functions
A good stockbroker must have the ability to explain the workings of the stock exchange to his clients. After the orientation and the client has a working knowledge of what to expect, the stockbroker can then collect information on the client’s needs and financial ability.
The stockbroker may draw up an investment plan and the stockbroker will put the order out on the floor of the securities exchange by phone or by computer.
Once the transaction is done, the client (now the buyer) pays for the stocks. The broker then performs the clearing and settlement procedures and transfers the stock title accordingly.
Choices
As a beginning investor, it is important to decide right away whether you want to hire a discount stock market broker or a full-service broker.
Discount brokers supply a minimal level of service, but they also allow you to make trading decisions online. Full-service brokers will provide the same, plus in-depth analysis if necessary. They will also give out advice with each trade. The only difference is that their services call for higher commissions and fees.
Commitment
Schedule a meeting first before committing to any brokerage house. You are supposed to know your broker personally before handing him your money.
Find out what exactly is the specialty of your potential broker. It is quite acceptable to first question each stockbroker about their different trading styles and what they typically handle.
Welcome to the fascinating world of stocks, brokers and the stock market.
Times may be hard, but this should not stop you from looking for ways to earn more than what you are already getting. This may be the ideal scenario, but you have to make sure that you fully understand all means, ways and terms of whatever venture that you may want to pursue. This is very true in dealing with the stock market. Here are some vital things that you have to know about this as you begin searching for clues about the topic.
The basic idea here is that you as the trader will buy and sell stocks. There are two ways in which this can be accomplished. This can be done on the exchange floor or you can also opt to trade through the electronic medium. There are some groups that are pushing for the latter to become the more utilized form for this kind of activity, but it cannot be helped that many people who opposed such notion. These days, most markets, including the most popular NASDAQ, are already trading using the electronic medium. There are some trading methods that must be done in person and this must happen on the floor through several exchanges, such as the futures’ markets.
The First Method – Through the Exchange Floor
You may already have an idea of how this works or how it looks like because this has been used in many television shows and films. In Hollywood, it is already very common to show the NYSE or the New York Stock Exchange to reflect this kind of activity. The picture usually looks like hundreds of people rushing about when the market is open. These people shout and gesture to one another, while others are talking on the phones. These are happening while everybody keeps on looking at the monitor as they enter some information on the terminals. The overall appeal is chaotic and this is actually very true. The markets will work out all the trades when the day ends and everybody dwindle down as they all prepare for the next day.
The Second Method – Through the Electronic Medium
Even NYSE uses this medium for the small percentage of its orders, but most transactions are done by humans. NYSE is the complete opposite because everything is done electronically. This can be accomplished through vast computer networks that handle the pairing of the right buyers and sellers, so that there is no longer any need for human brokers. The overall appeal is more simple and peaceful than the first type, but this is also faster and very proficient. Some samples of traders that prefer this method include mutual funds, pension funds and other institutional traders. This is also ideal for those who are only learning the tricks of the trade because instant confirmations on your trades are ensured. You will still be guided by an able broker with your transactions, so you really have to pay attention in looking for the right person.
As you go about the process of trading in the stock market, you will learn more things that can hone you to become better and more knowledgeable on this venture.
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