Stockbrokers 

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Stockbrokers



Financial advisors provide investors with assistance in their financial planning. Afinancial advisor evaluates your financial situation and then formulates a financial and investment plan. Stockbrokers provide investment advice about individual securities and place investors’ trade orders. To trade securities, you need access to the marketplace, and you attain access through a brokerage firm. The selection of a stockbroker is a personal decision. You can choose from three types of brokers:
* Full service
* Discount
* Online

The amount and level of services among these basic types of brokers differ, as do methods of compensation.

Stockbrokers charge commissions for executing trades. These commission costs vary considerably and can affect your profits and losses. Commission charges can be based on three factors: number of shares traded, the share price, and the total amount of the order. Full-service and national brokerage firms generally charge the highest fees and commissions, followed by regional service brokerage firms, which tend to be marginally cheaper. Discount brokerage firms offer reduced commissions, and they charge either no fees or reduced fees for miscellaneous services. Commissions are discounted even more at deep-discount brokerage firms.

Electronic trading or online brokers allow you to place your own trades using a computer linked to the Internet. The costs of online trading can vary from $5 to $20 per trade. Research is widely available through these online trading services. Some brokerage firms charge nominal amounts for Standard & Poor’s (S&P’s) reports or Zack’s research reports, and others provide them for free. Online investing can mean online research no matter which type of brokerage firm is used. The government’s Web site Edgar Online (www.freeedgar.com) provides data derived from the thousands of SEC documents filed by publicly traded companies.

If you are comfortable using a computer and do not require information and research from a personal broker, you can benefit from the lower commissions charged by online brokerage firms. You also should ask about the broker’s fee structure for custodial services, account management, and transactions before making a final choice.




Categories in Trading Mistakes

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