Brokers and Online Trading: What Does A Broker Do?
AAA
  1. Brokers and Online Trading: Introduction
  2. Brokers and Online Trading: What Does A Broker Do?
  3. Brokers and Online Trading: The Costs
  4. Brokers and Online Trading: Full Service Or Discount?
  5. Brokers and Online Trading: Choosing A Broker
  6. Brokers and Online Trading: Accounts And Orders
  7. Brokers and Online Trading: Conclusion

Brokers and Online Trading: What Does A Broker Do?


Brokers are the people who handle customer orders to buy and sell securities. In the same way that a grocery store acts as a middleman between shoppers and the companies that produce food, a broker acts as a middleman between the securities that trade on the market and the investors who buy them.

We should also mention that the word "broker" can be used in a variety of circumstances. It could mean an individual person you deal with or it can refer to a brokerage firm such as Charles Schwab or Merrill Lynch.

To be a stockbroker in the United States, you must pass two licensing examinations from the National Association of Securities Dealers (NASD): the Series 7 and the Series 63. These exams prove that a broker is informed about what he or she is selling and knows all the regulations and laws in the securities industry. Most countries have similar licensing programs.

The most important thing to realize is that brokers are salespeople. They get a commission when you trade. This will be our focus in the next section.

Brokers and Online Trading: The Costs

  1. Brokers and Online Trading: Introduction
  2. Brokers and Online Trading: What Does A Broker Do?
  3. Brokers and Online Trading: The Costs
  4. Brokers and Online Trading: Full Service Or Discount?
  5. Brokers and Online Trading: Choosing A Broker
  6. Brokers and Online Trading: Accounts And Orders
  7. Brokers and Online Trading: Conclusion
RELATED TERMS
  1. Exchange Traded Derivative

    A financial instrument whose value is based on the value of another ...
  2. Catastrophe Equity Put (CatEPut)

    Catastrophe equity puts are used to ensure that insurance companies ...
  3. Open Trade Equity (OTE)

    Open trade equity (OTE) is the equity in an open futures contract.
  4. Bid Wanted

    An announcement by an investor who holds a security that he or ...
  5. Multibank Holding Company

    A company that owns or controls two or more banks. Mutlibank ...
  6. Short Put

    A type of strategy regarding a put option, which is a contract ...
  1. How can an investor profit from the increase in popularity of discount brokerages?

    Find out how investors benefit when brokerages compete with each other, and how discount brokerages are changing the market ...
  2. If a long call is owned on the record date of a stock, is the owner of the option ...

    Learn how holding a long call option does not entitle the holder to a dividend on the underlying stock unless the call is ...
  3. How can an investor profit from the cyclical nature of the electronics sector?

    Learn how sector rotation and clever options strategies, such as the long straddle, help investors profit from the cyclical ...
  4. What does negative vega mean for credit spreads?

    Learn about the option Greek vega, credit spreads and how vega affects the values of option credit spreads when volatility ...

You May Also Like

Related Tutorials
  1. Bonds & Fixed Income

    Investing For Safety and Income Tutorial

  2. Economics

    American Depositary Receipt Basics

  3. Investing Basics

    Stock Basics Tutorial

  4. Options & Futures

    Binary Options Tutorial

  5. Mutual Funds & ETFs

    Top ETFs And What They Track: A Tutorial

Trading Center