Would you like to learn how to trade stocks like a pro? Well after you read this article on stock market investing basics you will be well on your way.
In this article on stock market investing basics I am going to teach you about brokerage houses. A broker is someone who has passed a test called a series 7 exam administered by the Securities and Exchange Commission and gives them the necessary qualifications to buy and sell stock for their clients. Brokerage houses are nothing more than a firm composed of stockbrokers.
As well as having the qualifications to buy and sell stock brokers are also the own people who are legally permitted to buy stock. So like it or not you must use a broker to buy stock. There are three kinds of brokers.
- Full service brokers – A full service broker manages his or her client’s accounts directly and charges the highest commissions. They are usually very hands on, managing their clients’ accounts directly. If you are not planning on trading stocks full time then you will not need a full service broker.
- Discount brokers – With discount brokers you pay for what you get. If you use full service brokers you will be charged full price regardless of how many of the brokers services they use. Discount brokers on the other hand have a price structure broken down like a menu.
- E-brokers – The rapid growth of the internet has created a third kind of broker the E-broker. These electronic brokers have grown to massive sizes in the few years of their existence. They have very little overheads and because of this their charges for buying as selling stocks are far lower than physical firms.
Now that you have learned these stock market investing basics you will be well on your way to begin trading stock like a pro.