What is the Role of Stock Brokers?

A stock broker is a professional who buys and sells stocks and other securities in the stock market through the book makers from the stock investors. As per the law in United States one needs to pass the General Securities Representative Examination or the Series 7 exam for working as a stock broker. Brokers provide different types of services to their clients.

Execution only – In this service the broker only carries out the trading according to the direction of the investor. This is the basic and the most commonly used service of the brokers.

Advisory dealing – In this service the broker not only performs the buying and selling instructions of the client but also advises the investor about which stock to buy and which stock to sell.

Discretionary dealing – This is the most comprehensive service that a broker provides. In this case the broker has the discretionary power to take the investment decisions on behalf of the investor.

These are the basic services provided by the stock market brokers and it completely depends on you which service you will subscribe to. For example, if you are quite apt at stock market analysis and can regularly watch on the happenings of stock market and the stocks in which you invest, it is better to have a stockbroker to execute your buying and selling instructions. It will not only save the service charges but also give you full confidence in stock market trading.

If you are relatively new to stock investment or if you do not have adequate knowledge of stock analysis or if you do not have the time or resource to do thorough research on the stock market the advisory service is effective for you. It will not only execute your trading directions but also provide you with effective tips and guidance for stock market investment. Though it will be a bit more expensive but then you can significantly gain from the technical knowledge and experience of the broker and its research and analysis team.

The full service broker is the preferred solution for those who do not have the time or knowledge to maintain their portfolio. In this case the broker takes all the decisions for investing in the stock market. This is the most costly broking service but then it will not require you to spend any time for your stock market investment.

Just like the different types of stock broking services there are different categories of brokers as well. While choosing your stock exchange broker, it is wise to select from the reputed stock trading companies as that will make sure you gain from their robust infrastructure from analysis and experience in stock market. That also applies to selecting your online trading company who will carry out the online trading on your behalf.

Source by Amit Malhotra

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