Investing 101: Stock Brokers Guide

Stock brokers are licensed individuals or organizations that act as financial counselors and/or advisors to investors of stocks and other forms of securities.

Stock brokers can, therefore, be characterized as agents acting on behalf of individuals who seek to hold shares in given markets. The stock brokers do everything for the investor and in the process claim a given percentage from the profits in terms of commissions.

Stock brokers are intermediaries between two parties in a trade, the buyer and the seller. They will negotiate on behalf of the buyer and execute on behalf of the seller. Stock brokers are professionally qualified to answer investor questions such as price changes in the market when to focus on a particular trade among others.

As licensed firms or individuals, stock brokersare regulated bodies or personnel offering brokerage services to investors willing to enter or trade in the stocks and other securities markets.

Every stock broker or firm is mandated to hold a part in and as a membership of stocks exchanges among other registration requirements. These registrations also differ from one country to another. Legit stockbrokers will boldly display their registration details on their websites and will hold official documentations and contracts that will be used when signing in new clients.

In most cases, stock brokers offering services to individual investors tend to keep such investors as personal clients, but this does not suggest that they have not membered themselves with existing brokerage firms. This is because such memberships are vital to the success of the stock broker’s portfolio towards a new or existing investor.

Traditionally, stockbrokers and firms created a culture where stockbroking as a service was a full-time job. On that account, they would take down the interests of a client and execute them based on techniques that they would devise to achieve the set goals by the investor. The process made trading difficult due to understandably high commissions.

But the traditional way of trading on stocks and other securities has since been replaced by electronic and online trading. More discount-oriented firms and individuals have risen thus offering lower commissions to interested clients.

Investors have also become more aware of those opportunities and thus constantly falling culprits of bad non-experienced stock brokers.

For this reason, investors have established a concrete screening process such as looking onto a particular firm or individual’s achievements from the past as a commendable stock broker and the relationship that a firm or individual had built with previous clients among other factors.

Ideally, a good stock broker will also be required to maintain a specific approach when advising the investor. For instance, they need to gather all the information needed on the investor’s goals and expectations.

A discount brokerage account is mostly regarded by young investors in the securities industry. This allows them to avoid a full-service brokerage that would rather incur increased commissions.

Although there are a few misconceptions about stock brokers, there is a lot of supporting information from satisfied clients all over the world that shows the useful role that this line of experts continues to play in the industry today.

Stockbroking has become an essential way of life today when considering its massive contribution to the money market. Finding a reputable stock broker, on the other hand, has also become a necessity.

Regardless of an investor’s decision to forego an on the ground stock broker’s service, sometimes make his or her own decision on a buy or sell through an online discount broker, the end results remain the same thus bringing into the light the actual role of a stock broker.

How to Select a Stock Broker

Before choosing a preferred stock broker individual or firm, there are a few factors that come into play. Some of these factors will be dictated by understanding what stock brokers are and the services they provide.

Who they are

As already explained earlier, a stock broker is a representative or advisor that acts on behalf of an investor for stocks and other securities in the industry. The stock brokers will guide on the strategies the buyer or seller would take to execute a profiting sale.

A percentage commission is charged by the stock broker depended on the agreement he or she has set up with the client for service rendered.

 The services they provide

A stock broker provides an array of services depending on the interests of the client. For example,

  • He or she will be responsible for opening a CDs account for the client,
  • Assist in depositing and withdrawing of securities as per the interests of the client,
  • Keeping track of all transactions and settling them where due,
  • Acting as an advisor on investment procedures the client to take,
  • Assisting with information provision as and when new investment ideas arise,
  • Researching and reporting on how other competitors are performing thus finding loopholes that an investor can use to gain more.

Selecting a Stockbroker Firm

As long as an investor is interested in undertaking any forms of transactions related to the secondary market, the services of a stock broker or stockbroker firm will be handy.

But choosing a reliable stockbroker firm is the biggest challenge investors are facing these days especially with the introduction of online electronic platforms that have slowly changed the traditional ways of trading.

All stock broker firms in the world are licensed and regulated by countries in which they are run. The regulations may differ from one country to another but the overall job responsibilities remain the same.

The following are some of the factors that an investor should look at when choosing the best stockbroker firm.

  • The kind of service that the investor would like executed by the organization— There are firms whose reputation stands out when it comes to trading various types of securities. The investor should, therefore, select a firm that has reaching reputation on the securities that he or she wishes to trade.
  • Accessibility—Depending on preferred service, you may find yourself requesting for an agent you can talk to physically. A firm that is at proximity where you can interact with staff members would be therefore convenient. Availability of branch offices also adds value especially during the unexpected change of market prices and the need to focus on a different type of stock.
  • Research facilities and help—A firm that offers the ability to find out more on what is happening in other markets through research and well-optimized sites among other trading platforms is a recommended option.
  • Provision of online trading options—Due to the betterment of technology, it has become primary that at least any firm offering stockbroking services should also extend the services online. By providing web trading capabilities, clients are able to access any required service anywhere at any time. For this reason, provision of an online trading option is a vital characteristic that defines a reputable stockbroking firm.
  • Certified personnel— Firms that claim to be efficient with services provision needs to have all its stockbrokers certified as investment advisors.

A stockbroker firm is made up of state of the art facilities and a number of competent licensed advisors. A few factors dictate the qualities of a good investment advisor as provided by any stockbroking firm.

Selecting a reliable investment advisor

While every stockbroker is expected to act on behalf of the client’s interest, a few characteristics define the given member as a promising brokerage expert.

  • Competence: The qualifications of a stockbroker range from holding a minimum of a bachelor’s degree to years of experience on stock markets. He or she should be versed on market behavior, know how to anticipate a probable market change even before it happens as well as be certified to represent a client in the stock market.
  • Integrity: Whether an investment advisor is representing a seller or a buyer, he or she should remain neutral. By offering fair treatment to either customer, the advisor will be exciting integrity, which is a noble quality for reliable investment advisors.
  • Accountability: During transactions, a few accidental mistakes may arise. These mistakes in most of the cases are easy to fix. A reliable advisor will take responsibility for any accident and resolve accordingly.
  • At par with current affairs: Depending on the interests of the client, the broker will be required to stay at par with current affairs in the financial industry and stocks. Some clients choose to invest on a new share market simply because they have a feeling it might do well. The advisor will, therefore, play his or her role in ensuring that the client is represented to the best of his or her interests.
  • Forecasting: Few industries require participants to possess analytical knowledge that will help determine future markets by analyzing current and historical data. Forecasting techniques assist in determining stock price movements, anticipated profits, among others. 

Stockbrokers educational and research services

In order to maintain a positive clientele network, a reliable stockbroking platform, or firm will provide various additional services.

A research or educational unit is necessary for every firm because it assists investors in understanding the staff, services provided among other stockbroking ideas with the company.

Clients are able to choose recommended shares to buy as researched and analyzed by the firm because of sector reports, daily and weekly reports as well as the company’s historical data.

The transaction fees are also well evaluated within the educational and research center in the company and thus why any firm should possess such a department within the on the ground facilities as well as on their online or electronic platforms.

Placing an order through a stock brokerage firm

There are a few ways in which an investor can reach out to a stockbroker and place his or her order.

  • By visiting the brokerage on the ground firm – Most renowned brokers in the world have ground offices where clients can visit them and place their orders. This is very convenient because the client interacts one on one with the broker and thus are able to share ideas at close distances.
  • By placing a call to the broker – To be able to maintain a positive clientele approach, stockbroking firms have set up a 24/7 support center. Clients can call and get assistance on any questions they may have regarding purchases or sales.
  • Utilizing the internet – At least most stock brokerage firms these days have established an online trading center through their web and mobile trading platforms. The internet supports live chats and email systems where clients can reach out to stockbrokers and place their orders. In addition, these platforms also act as trading opportunities while on the go. 

Buying shares listed on secondary markets

A few factors are considered when placing orders that are already listed on secondary markets. The following is a procedure that should be followed by the client.

  • Avail the name of the company selling the shares, the type of share and the price per share, as desired.
  • Submit the details to the broker who in return will place your order.
  • Upon processing, the broker will update you on the shares that he or she was able to buy and extra money refunded.
  • After execution, a sold note will be availed to you by the broker. This is a special document that helps confirm the transaction and is good for record keeping.


The rise of stockbrokers has continued to increase following increased interests among investors willing to join the stocks and other forms of securities markets.

Although there are tons of stockbrokers out there, choosing the most reliable firm or individual can be a hassle. By listing down some of the characteristics and features that define the competence of a stock broker, an investor can make an informed decision on the type of shares, or stocks to choose when either buying or selling.

On overall, the investor and the stock broker will work hand in hand by sharing ideas with the execution conducted based on the client’s interest.

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