Depending on the type of investing that you plan to do, you may need to hire a broker to handle your investments for you. Brokers work for brokerage houses and have the ability to buy and sell stock on the stock exchange. You may wonder if you really need a broker. The answer is yes. If you intend to buy or sell stocks on the stock exchange, you must have a broker.
In India stockbrokers are required to obtain their license to offer brokerage services. Stock brokers get a Certificate of Registration (CoR) from SEBI, an approval order to proceed with trading. Under the strict guidelines of the stock exchange, no stock broker is ever allowed to practice until he/she has a valid CoR from SEBI. If some one is not interested in obtaining certificate there is also an option to become sub-broker.
Sub-Brokers are Individuals who want to practice on behalf of a registered stock-broker. They trade under the registered member of the stock exchange or a stock broker’s membership ID.
Broker and Stock Analyst
It is very important to understand the difference between a broker and a stock market analyst. An analyst literally analyses the stock market, and predicts what it will or will not do, or how specific stocks will perform. A stock broker abides your requests and simply follow your instructions to either buy or sell stock. Usually, stock broker do not need to analyse stocks for their clients. However, off late the difference between stock broker and stock analyst is diminishing.
Most big stock broking companies employ relationship managers, they do multitasking role of analyser and broking. They offer both types of services to their clients who invest through them. You need to open online demat trading accounts with them to avail their services.
Brokers earn their money from commissions on sales in most cases. Brokerage fees are determined by brokerage calculator. When you instruct your broker to buy or sell a stock, they earn a set percentage of the transaction. Many brokers charge a flat ‘per transaction’ fee.
What are Types of Brokers?
Identify the broker as per your needs. If you have enough knowledge to deal with stocks then discount brokers are better option, it will save some brokerage fees for you.
There are two types of brokers: Full service brokers and discount brokers.
Full service brokers
Full service brokers can usually offer more types of investments, may provide you with investment advice, and is usually paid in commissions.
Discount brokers typically do not offer any advice and do no research – they just do as you ask them to do, without all of the bells and whistles. So, the biggest decision you must make when it comes to brokers is whether you want a full service broker or a discount broker.
If you are new to investing, you may need to go with a full service broker to ensure that you are making wise investments. They can offer you the skill that you lack at this point. However, if you are already knowledgeable about the stock market, all you really need is a discount broker to make your trades for you. Here, you can download online trading app