Trading stocks occurs on exchanges: places where buyers and sellers meet to decide on the price of a stock. These can either be physical locations on the trading floor of a large building, or online for electronic trading.
The purpose of the stock market is to bring together buyers and sellers of stocks to reduce the risk of investing.
As a profession, stock traders advise shareholders and manage portfolios while agreeing to buy and sell bonds, stocks, and shares. They conduct research and observe the financial markets. These professionals engage in trading on behalf of an agent, hedger, arbitrageur, speculator, or investor.
Trading with a broker
A broker will buy and sell stock through the stock exchange and charge a commission to do so. Brokers are licensed to trade stocks in the exchange, either on the trading floor, by phone, or electronically. Brokers assist others with trades.
Buying and selling stocks can be done online, with the services of an online broker, who takes the place of the human broker. Instead of talking to people about their investments, however, the buyer will decide which stocks to buy and sell, and request trades on their own.
Some online brokerages will offer live brokers and broker-assisted trades as part of their services if a customer needs help.
Choosing a broker
When choosing a broker, either online or in person, different firms will offer different levels of help, account types, and other services.
— Keep in mind how much money you plan on investing, since most firms need a certain amount to open an account, which is different from the minimum account balance.
— How frequently you plan to make trades should be another consideration because of fees that can be incurred for account inactivity; conversely, if a lot of trades occur then the trader will want a lower fee per trade.
— The level of trading experience you have will determine what kind of broker and assistance you will need. Brokers can offer market analysis, articles on successful trading, and additional help, though they are moderately priced. Less expensive brokerages do not offer much research or broker-assisted trades.
Doing research before choosing a broker and certain stocks is essential to get the most out of an investment, especially if the broker does not offer much in the way of research or assistance, which will depend on their price point.
Online guides can help with stock trading issues and keep up up on other industry news that may concern you as a budding investor.