Brokerage firm and brokers are the two basic terms that you will need to know as you begin your journey in the stock market. The share market has online and offline trading accounts,and as a trader, you can choose any of them. However, before going for any of these accounts, one needs to understand the role of the stockbroker. A stockbroker offers different services and helps the client to understand the movement of the prices as well as price trend in the market. He also offers technical analysis and charts which the client can read and form a strategy that can convert the trade into profit. Here is a quick guide for the new investors to choose the right path as they enter this vast field.
Understand Your Brokerage Statement and Account
The first and the foremost step to start the investment step is the opening of the brokerage account.
- Read Your Trade Confirmations
When you sell or buy an investment using your brokerage account, you will receive a document known as the trade confirmation. This important document is given by the stockbroker and has all the important information on it. This document must be kept handy as losing the document can result in loss of money.
- Choosing a Brokerage Account or Stock Broker
After completing the two important steps of opening a brokerage account and signing the trading confirmation, the next stephere is to identify the type of broker you need. There are two types of brokers – the full-service broker and the discount broker. Both the brokers have their pros and cons. You can choose any one of the two according to your requirements.
- Brokerage firms and full-service brokers
The full-service brokers are highly paid brokers. These fancy brokers charge at each step as they provide their clients with advice and carry out research before tying up any deal.
In spite of the high fees charged by these brokers, many fresh investors go for the traditional brokers as they give them the required direction.
- Payment of the broker
The fee structure proposed by most of the stockbrokers consists of many unnecessary things and can be quite outrageous. Before you fall into the trap of these brokers, educate yourself and only pay for the services you need and mostly that are important.
- Buying stocks without the broker
If you don’t want to engage in the costly broker affairs, then you can easily buy stocks using a program known as the “direct stock purchase program.” However, buying stocks with thebroker as an intermediary is a better option.
Asset Management Account
The traditional brokerage firms and brokers have introduced a new account known as the asset management account. This account can be a burden for those who hate paperwork,but it is a convenient option of paying some percentage of account value rather than paying regular commissions.
Street name for trade
It purely depends on you if you want a street name or not. However, carrying on trade using your name sounds a better option.