How to go about choosing a stock broker

How to go about choosing a stock broker

Till the point you are a stock broker all by yourself, you would need to avail the services of one to handle all financial transactions on your behalf. They are people who work in brokerage houses and help you in the quest to buy or sell stocks. A lot of people might wonder is there any need to seek the services of a broker. Yes, is the answer as you need to avail their services in order to buy or sell shares in a stock market.

Most of the brokers possess a background in finance or business, with an advanced degree in both the subjects. So that they secure a license in order to operate in a market, the stock broker has to pass a couple of tests that are really difficult. People are often confused about the difference between a stock broker and a stock analyst. In simple terms a stock broker is an individual who follows your instructions as far as buying or selling of stocks are concerned as they are not going to analyze any stocks. On the other side of the coin an analyst is going to study the stock market and gives you a prediction which stock will perform better than the others. This gives you a fair indication on how specific stocks would be performing during a given point of time.

The stock brokers earn their income on the basis of commission obtained from sales. The moment you tell a broker to buy or sell a stock they are going to charge a specific percentage of the transaction. Most of the brokers are known to levy a flat charge in terms of transaction per charge.

Now there are a couple of types of brokers in the market, the full time brokers and the top 10 discount brokers in India. Both of them do have their own set of positives along with negatives. Once again this depends upon the type of services you are looking to avail in the first place. With discount brokers they are not going to conduct any research and not even provide you with any advice, till the point you ask them specifically to do so. If you ask them to do so expect some bells and whistles along the way. Full service brokers work out to be more of a specialized form of service. Firstly, they are going to provide you with a lot of investment options, might equip you with relevant investment advice and earn commissions on the basis of trade that you undertake.

As far as the choice of a broker is concerned the main decision you have to take is whether to opt for a full time broker or a discount broker. The former does provide you with expert advice if you lack skills in this market or if this seems to be an unknown domain. On the other hand, if you have some idea on how a stock market operates a discount broker is a better choice.

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