A stock broker's job is to make investing easier for individuals and companies, whether they are interested in passive investing or active trading. In exchange for a fee, the stock broker keeps up-to-date on company profiles, stock values, online trading activities, and various opportunities to make money for clients.
Types of Stock Brokers
The types of services provided by a stock broker, or stockbroker, depend on the place where he works.
- Online Brokerage Firms: Firms that specialize in online trading generally do not have physical offices, so a stock broker working there may focus solely on processing customer transactions. These brokerages are best for people who enjoy independent, active investing.
- Discount Brokerage Firms: These may offer the same online trading capabilities as their virtual brokerage competitors, but the stock brokers who work there also tend to share more advice and provide more services.
- Full-Service Stock Broker: They may help with more than just investing activities. Full-service brokerages frequently offer online trading and research for active investors, but they can also answer questions and process transactions for passive investing.
To clarify the role of a stock broker, consumers must understand other key factors that play a part in their jobs and what they do:
- Stocks: A stock is the basic unit of investing and online trading. It represents a share of ownership in a company. For instance, if a company divides its ownership into 100,000 shares and an individual investor purchases 1,000 shares, they essentially own 1 percent of the company.
- Stock Market: If the investor decides to buy more shares or sell their ownership, they must locate a like-minded investor locally or through online trading. The stock market is the place where this match-making of investing activities occurs.
- Stock Broker: As the number of investors, companies, and shares grows, one-on-one transactions are no longer feasible. To simplify the process, investors work with a licensed stock broker through physical requests or online trading. The broker is then authorized to perform investing activities within the stock market on behalf of clients.