Based on the form of investing that you want to do, you may need to use a broker to manage your investments for you. Brokers work for brokerage houses and have the capability to buy and sell stock on the stock exchange. You may question if you really need a broker. The reply is yes. If you intend to trade stocks on the stock exchange, you must contact a broker.
Stockbrokers are needed to pass two distinct tests in order to get their license. These tests are truly difficult, and most brokers have a knowledge in business or finance, with a Bachelors or Masters Degree.
It is very useful to understand the difference between a broker and a stock market expert. An analyst literally analyzes the stock market, and anticipates what it will or will not do, or how specific stocks will perform. A stock broker is just there to follow your guidelines to either buy or sell stock... not to analyze stocks.
Brokers make their money from commissions on sales in most cases. When you inform your broker to buy or sell a stock, they earn a set percentage of the payment. Many brokers cost a flat 'per transaction' fee.
There are two types of brokers: Full service brokers and discount brokers. Full service brokers can normally offer more types of investments, may offer you with investment advice, and is commonly paid in commissions.
Discount brokers usually do not provide any advice and do no analysis - they just do as you request them to do, without all of the bells and whistles.
So, the biggest decision you must establish when it come to brokers is whether you want a full service broker or a discount broker.
If you are newbie to investing, you may need to go with a full service broker to make sure that you are making wise investments. They can offer you the expertise that you lack at this point. However, if you are by now knowledgeable about the stock market, all you really need is a discount broker to make your trades for you.
If you are aiming to raise capital by buying a public shell or a reverse merger shell, you may require a broker dealer to handle the transaction for you....But that is the topic for another article.
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