With online stock trading the latest in Internet technology, why do I need a
broker to trade stocks online? A stock market is made up of at least one stock
exchange, and usually more than one. A person who is not a member of a stock
exchange can not just trade stocks on the exchange or the market. A stockbroker
is a member of the exchange that they trade on, and this is how you have access
to buying and selling stocks on the stock market. Only by using a stockbroker is
it possible for normal individuals to trade on the stock exchange and the stock
market.
All stockbrokers for a specific exchange must be licensed and
registered by that exchange, and this insures that the stockbroker acts
ethically and legally at all times. If a stockbroker is caught violating ethics
or the law their trading priveleges on the exchange can be taken away. A
stockbroker buys and sells stock for their own benefit, and they also trade
stock shares for individuals that are not stockbrokers. This practice earns them
a commission on trades that they execute for you.
Brokers that specialize
in online stock trading use computer terminals to communicate and execute these
trades for their clients. Just because trades are executed electronically online
does not mean you do not require a broker. Even trades that are executed
electronically are only accepted if they are executed by a registered
stockbroker on that exchange. Without a broker, you will not get any farther
electronically trading stocks than you would if you waded onto the trading floor
on Wall Street and tried to trade. Not matter which method you use to trade your
stocks, whether you use an electronic execution or an execution on the trading
floor of the exchange. A stockbroker is a member of the stock exchange, and only
members can trade on the exchange. These brokers trade stocks for themselves,
and they trade stocks for a commission for individuals who are not a member of
the stock exchange. In this way normal people can invest in the stock market and
buy and sell stocks. Online brokers generally work from computer terminals that
are linked to other computers creating a network. A broker is needed to trade
stocks no matter which trading method you choose, and finding the right online
broker is the most important decision you will make concerning stock
trading.
Copyright ?2007 Joel Teo. All rights reserved.
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