Why You Need a Broker Articles | Personal Finance

 Based on the type of investment that you are interested in, you might need the services of an investment broker. These professionals work for investment brokerage organizations and possess the required talent and expertise to buy and sell stocks at the stock exchange. There is no doubt whatsoever that you need the services of an investment broker, if you wish to buy and sell stocks at the stock exchange.

While most stock brokers have a background in business or finance and hold a Bachelors’ or Masters’ Degree, they also have to pass two different and tough examinations before they are allotted the license to become a broker.

There is a lot of difference between a stock broker and a stock market analyst. While the stock broker merely follows your instructions on whether to buy or sell stocks, the job of a stock market analyst is to analyze and predict the market behavior, the future trends of stocks, how specific stocks are expected to perform in the current environment, etc.

The source of income of a stock broker is from commissions from the sales value of stocks he has bought or sold. They earn a small percentage of the value of the entire transaction. There are broker also who change a flat fee per transaction, called the ‘per transaction’ fee.

There are essentially two types of stock brokers: the full service brokers and the discounted brokers, performing two individual sets of function. While the full service broker deals with many varieties of investments and is even equipped with various investment advices, he earns his commission through transactions. The discount stock brokers on the other hand are not equipped to give you any form of investment advice and they do not even study market trends and behavior; they simply do what you ask them to do.

So once you have decided to seek the help of a stock broker one of the biggest decisions you have to take is whether to choose a discount stock broker or a full service broker. If you are a novice in the field of stock broking, it is a better idea to go with a full service broker as he can ably guide and assist you in your investment choices. They are skilled in their profession and at this stage and you need all the professional help and guidance you can get. Once you gather the requisite experience in this profession and know the pitfalls of every step your self and can make informed decisions yourself, you can then take the help of a discount broker for doing the necessary trading of stocks for you.