Stock Brokers
Stock Broker is an agent who helps in purchasing, selling or trading stocks on behalf of the customer. Whenever a stock trading is done between two parties, the broker ensures smooth transaction and completes all the related formalities; and at times, advises his customer to purchase or sell particular stock.
Now a days, in this busy life, it is difficult for an investor to go to any stock trading center such as New York Stock Exchange, and hunt for the stock buyers or purchasers himself; hence, these brokers provide their customers with wide spectrum of investments such as stocks, mutual funds and other entities. The stock broker is a sales person who works for the stock brokerage house which is out there to make money for themselves and their staff.
Brokers could be on fixed salary or could be paid on commission or they could get both, salary and commission. In order to become a broker in US, an individual has to pass couple of licensing exams called as Series 63 and Series 7. After successfully passing these examinations, the broker is then allowed to carry advice, transaction and solicit business.
Online Stock Brokers:
Internet stands out as the easiest and newest mode in stocks trading. Online trading through stock broker can offer latest research data, new offers and fast transaction. The commission involved in online trading is usually very low, as low as 1 or 2 USD.
Types of broker:
It is necessary to identify the type of service required by the investor if proper homework is not done. The basic query the investor should have in mind is whether he would like to seek advice or whether he wants to just trade. As brokers carry trade on the investor’s behalf they are distinguished in two categories:
- Full Service Stock Brokers: Full service brokers offer hand holding and investment advice. They provide research data and variety of investment products such as stocks, bonds and other derivatives. Additionally, they also provide investment insurance and annuities. These brokers charge heavier than Discount Stock Brokers, and are usually commission based.
- Discount Stock Brokers: Discount Stock Brokers trade stocks and solicit their business out of the customers. They do not provide any investment advice or research data; and usually charge low fees than Full Service Stock Brokers; since they don’t have to hire expensive analysts and brokers. They just offer trading and usually do not encourage more investment from their customers. They usually have fixed salary and not commission based and they make their business by high trading volume through their computer based online entry service.