Depending upon the type of investing that you plan to do, you may prefer to hire a broker to manage your investments for you. Brokers work for brokerage houses and provide the ability to purchase and sell stock on the stock exchange. You may wonder if you really prefer a broker. The answer is yes. If you intend to trade stocks on the stock exchange, you will need to have a broker.
Stockbrokers are vital to pass two different tests to obtain their license. These tests are quite complex, and most brokers have a background in business or finance, with a Bachelors or Masters Level.
It is very important to understand the dissimilarity between a broker and a stock market analyst. An analyst literally analyzes the stock market, and anticipates what it will or will not do, or how well stocks will perform. A stock broker is only there to follow your directions to either buy or sell stock... not to analyze stocks.
Brokers earn their money from commissions on sales in most instances. When you instruct your broker to buy or sell a stock, they earn a set percentage of the deal. A number of brokers charge a flat 'per transaction' fee.
You will find two types of brokers: Full service brokers and discount brokers. Full service brokers can usually offer more varieties of investments, may provide you with investment advice, and is normally paid in percentages.
Discount brokers typically do not give you any advice and do no research - they just do as you ask them to do, without all of the bells and whistles.
So, the primary decision you must make 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 prefer to go with a full service broker to ensure that you are making smart investments. They can offer you the skill that you lack at this point. However, if you are already knowledgeable about the stock market, all you really need is a discount broker to run your trades for you.
If you are looking to raise capital by buying 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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