Are you wondering what a stock market broker is? In this article I am going to tell you what they are and what they do.
A stock market broker is an investor’s direct line to Wall Street. Although the internet has made it easier for investors to take control of their portfolios you will still need some kind of broker if you want to trade stock and bonds.
Brokers are the people who handle customer’s orders to buy and sell stocks or bonds. Basically they act as the middle man between the securities that trade on the market and the investors that buy them. To be a stock market broker you must pass two licensing examinations from the national association of securities dealers (NASD).
They are the series 7 and the series 63, these exams prove that the broker is informed about what he or she is selling and knows all the regulations and laws in the securities industry. The most important thing you need to realize is that brokers are salespeople and get a commission when you trade.
To begin trading stocks you will need to open an account with your stockbroker. These accounts require a minimum deposit of $500-$2500. If you don’t have the money you can use a dividend reinvestment plan (DRIP). This allows you to circumvent brokers by buying stocks directly from the companies that offer them.
Every broker charges a different price (called a commission) to trade. Commissions on trades vary and are based on things like the type of trade, the method used to do the trade and other factors. There are also many hidden fees and charges that you will need to watch out for, some of them are.
· Fees for transferring assets both in and out of your account
· Account maintenance fees
· Inactivity fees
· Fees for not maintaining a minimum balance
· Interest on margin loans
· Sales charges on certain securities
Make sure you shop around when looking for a stock market broker but bear in mind that many of these fees are standard in the industry.