Getting a Broker

By: John Farrow

Dependent on the category of shares that you intend to buy, you may need to hire a stockbroker to manage your investments on your behalf.

Brokers work for brokerage houses and have the ability to trade stock on the stock exchange. You might speculate if you truly need to employ a stockbroker. The answer is yes. If you want to invest in shares on the stock exchange, you must have a broker.

Brokers are required to pass two distinct exams in order to attain their license to trade. These tests are very difficult, requiring a great deal of study and most brokers have training in business or finance, with a Bachelors or Masters Degree.

It is vital to know the difference between a stockbroker and a stock market analyst. An analyst literally analyzes the stock market and predicts what it will or will not do, or how specific stocks may perform. A stockbroker is only at hand to carry out your instructions to either buy or sell stock… not to analyze stocks.

Brokers work for their money from commissions on transactions (either buying or selling) in the majority of brokerage houses. When you order your stockbroker to buy or sell a stock, they get a set percentage of the trade. Many brokers charge a flat ‘per transaction’ fee.
There are two types of broker: Full service brokers and discount brokers.

Full service stockbrokers can usually offer further kinds of investments, may provide you with investment counsel, and are more often than not paid in commissions.

Discount brokers by and large do not give any advice and do not do research – they just trade as you ask them to do, without all of the bells and whistles.

So really, the main decision you have to make when it comes to employing brokers is whether you want a full service stockbroker or a discount broker.

If you are brand new to investing, you may need to choose a full service stockbroker to make sure that you are making wise investments. They can offer you the skill that you lack at this early stage. However, if you are already knowledgeable about the stock market, all you really need is a discount broker to make your trades according to your wishes.

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Article submitted by Bryan Farrow writer on penny stocks and day trading|online stocks

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