Depending on the type of investing that you wish to do, you may require to hire an agent to manage your investments for you. Brokers work for brokerage houses and provide the ability to buy and sell stock on the stock exchange. You may question if you really need a broker. The reply is yes. If you plan to trade stocks on the stock exchange, you will need to have a broker.
Stockbrokers are required to pass two separate tests in order to get their license. These exams are truly complex, and most brokers have a background in business or finance, with a Bachelors or Masters Degree.
It is very fundamental to understand the difference between a broker and a stock market analyst. An analyst essentially analyzes the stock market, and anticipates what it will or will not do, or how well stocks will perform. A stock broker is just there to follow your instructions to either buy or sell stock... not to analyze stocks.
Brokers make their money from commissions on sales in most instances. When you inform your broker to buy or sell a stock, they get a set percentage of the payment. A number of brokers cost a flat 'per transaction' fee.
There are two types of brokers: Full service brokers and discount brokers. Full service brokers can typically offer more types of investments, may provide you with investment suggestions, and is commonly paid in percentages.
Discount brokers usually do not offer any advice and do no research - they just do as you request them to do, without all of the bells and whistles.
So, the biggest decision you must make when it come to brokers is whether you want a full service broker or just a discount broker.
If you are newbie to investing, you may prefer to go with a full service broker to ensure that you are making wise investments. They can offer you the skill 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 looking to raise capital by purchasing a public shell or a reverse merger shell, you may require a broker dealer to handle the purchase for you....But that is the topic for a different article.
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