How To Use A Stockbroker

If you want to trade stocks on the market then you have to use a qualified broker to do this. But they will do much more for you than just execute trades. Brokers will follow share prices, and advise you on potential gains to be made on positively moving stocks. Many different services are available from brokers now and they attract a commission or set fee arrangement. There are three basic services that a stockbroker can offer which are trades, stock advice and management of portfolios.


For share trade only arrangements your stockbroker will follow your instructions to the letter and execute your trades. The broker will help novice traders with jargon etc but will only execute the trade and not offer advice on it. This is generally the most inexpensive use of a stockbroker and they will often charge a commission based on the value of the trade. Buying and selling shares on behalf of investors is the most common service a broker will provide.


Second to offering basic trades is the provision of advice to investors. Providing advice is a more costly service as it involves a lot of work from the broker and considerable expertise as you will be advised on stocks that will potentially make you money. It is also likely that the broker will give up a lot of time to you to confirm that you understand and are comfortable with all the recommendations. This is vital if you do not have experience in share trading and the premiums for this are often a mixture of commissions and one off fees.


Discretionary and advisory portfolio management services are available from most brokers. There is a big difference between the two, an advisory portfolio service is where a broker will examine the market and provide several recommendations for you of stocks with potential and then it’s up to you. A discretional portfolio management service allows your broker to decide what your portfolio will be and trade on it without requiring any decision making from you.



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