Choosing Your Stock Market Broker
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.
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.
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.
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.
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.
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.
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.
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