Choosing A Stock Broker
Unless you are a stock broker yourself, you might need to hire a broker to handle your investments for you. Brokers are the people who work for brokerage houses and can buy and sell stock on the stock exchange. A lost of people wonder if they really need a broker. The answer is yes. You must have a broker if you plan to buy or sell stocks on the stock exchange.
Most brokers have a background in business or finance, with a Bachelors or more advanced degree. In order to obtain their license, stockbrokers are required to pass two different tests, which are pretty difficult.
Often times people don’t understand the between a broker and a stock market analyst. A stock broker is only there to follow your instructions to either buy or sell stocks; they do not analyze stocks. On the other hand, an analyst literally analyzes the stock market, and predicts what it will or will not do, or how specific stocks will perform.
Most brokers earn their income from commissions on sales. When you tell your broker to buy or sell a stock, they earn a certain percentage of the transaction. Many brokers charge a flat ‘per transaction’ fee.
There are two kinds of brokers: Discount brokers and full service brokers.
Discount brokers typically do not offer any advice and do no research – they just do as you ask them to do, without all of the bells and whistles.
Full service brokers can usually offer more types of investments, may provide you with investment advice, and is usually paid in commissions.
When it comes to brokers, the biggest decision you must make is usually whether to use a full service broker or a discount broker.
If you are new to investing, you may need to go with a full service broker to make sure you are making wise investment decisions. Full service brokers offer you the skill that you lack at this point. On the other hand, if you already have enough knowledgeable about the stock market, all you really need is a discount broker who will make your trades for you.
The author is a freelance writer. He has written articles for financial websites
such as Cash Advance Guide cashadvance101.com, Mortgage Guide etc.
