A broker is a person or company who works as a go-between for just a client and a stock market. Personal traders and investors utilize the assistance of exchange members since stock markets cannot accept orders from persons or organizations that are members of the exchange.
Types of broker
There are four main types of broker – a stock broker, forex broker, full-service broker and discount broker. While they all act as a facilitator between you and another party, they operate differently from each other. Some brokers are ‘execution-only’ brokers, while others execute, offer advice and manage your portfolio.
What is a Stockbroker?
A stock broker – also known as an investment broker – manages and executes the buying and selling of shares. Because individual investors cannot buy shares directly from the stock market, you would need a stock broker. The broker will buy and sell the stocks you want to invest in.
What is a forex broker?
A forex broker, also known as a retail forex broker, buys and sells currencies on your behalf. The benefit of having a forex broker includes 24-hour market access and the ability to speculate on currency pairs all over the world. Forex brokers try to minimise their costs to stay competitive in the market, but you still pay certain fees when trading with them, including a spread.
What is a full-service broker?
Full-service brokers, or financial advisers, offer more than one service – such as retirement and investment planning, tax advice and research. Someone who doesn’t have time to do their own financial planning might find this type of broker useful. Full-service brokers normally work for a fee that is higher than other broker fees. The main difference between full-service brokers and other brokers is the number of services they offer.
What is a discount broker?
A discount broker is a broker that charges a lower commission because they don’t offer any advice or value-adds like research and planning to your trade, they only execute. Typically, the more trades they execute for you, the lower the cost. If you choose this type of broker, you would need to manage your portfolio yourself.