Often called a Registered Representative or an investment advisor, or merely a broker, a stock broker is somewhat a professional individual. Firms usually hire stock brokers to handle transactions for both institutional and retail customers when dealing with stocks. These companies are called broker-dealers or brokerage firms, hence the name stock brokers.
The best stock broker should have a deep understanding of the financial laws and the regulations, principles of currency and economics, accounting methods, economic forecasting and financial planning, etc. If he possesses all the mentioned skills, he would be successful in this field.
Let us take a simple example. A typical grocery store acts as a middle man between the shoppers and the companies which manufacture the good. A broker has a similar job to the grocery store. He serves as a middle man among the investors who buy the shares and the securities that trade on the market. A broker should do the following :
- Research: He should know enough about the market situation at present to help his clients.
- He should help and advice his investors.
- He should set up his own investment goals and standards.
- He should be ready to take challenging investment decisions.
- He should be smart, active, and should adapt to change.
The above mentioned points are what the best stock broker in the market should be doing.
Brokers can be of two types. You can opt for any one of the below as per your convenience –
- Full time brokers: There are full-time service brokers, who are traditional brokers. They offer services like trading (stocks, currency, and commodities), research and advisory, sales and asset management, investment banking – all under the same roof. They also allow investing in Mutual Funds, Forex, IPOs, FDs, Insurance, and Bonds. In some cases, the full-service brokers are also involved in house banking and demat account services
- Discount brokers: Discount brokers offer low very brokerage, state-of-the-art execution platform for trading in stocks at very high speed, currency, and commodities derivatives. They also provide ‘no-frills’ brokerage service. This scheme is for the ‘do-it-yourself’ traders who seem to have a fair amount of understanding of the market. They are also called ‘the online brokers.’ They offer savings of about 80-90% on brokerage.
In the present economic affairs, there are different stock brokers available. They provide Three in One account facility to their customers. A Three in One Account is a unique account that blends an Online Trading Account, a Demat Account, a Bank Account on a single platform for your stock market purchases. The fund will automatically get attributed to the customer’s account once he sells his shares. Selecting a good stock broker according to your requirements is essential to make good revenues. You have to decide the best stock broker among the several discount brokers and full services brokers. Necessary planning and some amount of homework are essential to acquire knowledge about the stock brokers before investing in the trading market. The overall experience will be exciting and challenging.