Choosing the right stock broker

Last Updated on March 30, 2022

By this time after reading lots of articles about stock trading, you might have realised that you need a stock broker to execute your orders. But this doesn’t mean you must be at the disposal of the stock broker. You can still make your own analysis in selecting a good stock to invest. But the point is these have better knowledge about whats happening in the stock market. During the intial days of the stock market, people didn’t have much choice in selecting a stock broker of their likes.

1. Only one type of broker was available with whom all the share dealing has to be done. These stock brokers had tight grip on the share markets and stock exchange, sometimes even controlled the rise and fall of the share price. Their brokerage cost was just too expensive that it was considered stock trading is only for rich and not for the average salaried people.

2. Then with the innovation of the internet, the stock trading world became smaller. Once unreachable, stock trading became a money making strategy of every household. The information regarding stock market which were almost a secret, became open and people were able to trade sitting before their computer

3. With the expansion of the stock trading world, the need for different type of stock brokers has also increased. As for now, there are four types of brokers. These are:

Discount/online broker
Discount broker that provides advice
The full service broker
The money manager.

4. The discount/online broker is meant only to take order placed by you. You cannot expect any advice regarding your investment choices or about the stocks you have chosen . You might be provided with the reasearch tools and some widgets like charts, but decision of stock will be left to you.

5. The next category of brokers are just like discount brokers but the difference between the previous broker with them is that they provide with advanced tools, newsletter and some essential tips which would make you more comfortable in choosing the stock. Still they don’t stress any share in particular to invest. It would be upto you to make you decision.

6. The next category are the full service brokers, who have good knowledge about the movements of the share and the markets, and they also recommend stocks which they consider as a good investment. But try to be cautious, as these stock brokers also have good ties with the companies and they might divert you just to increase the investment in a particular share.

7. The final one is Money manager, who take care of your investment from top to bottom (ie) all you have to do is give the money. Choosing the right stock, investing, analysis and profit making will be taken care by the stock broker. But you must exercise caution by keeping track of the money. This is suitable for those investors who think they dont have enough time to concentrate in the markets.

Author: Eduardo Montero

I'm Eduardo Montero. Computer scientist by profession and passionate about online trading with more than 10 years of experience in the financial markets. I'm the author of hundreds of articles published in other websites about the online trading industry. Learn more about me here: About the author.