online broker

Know online broker

This is a brokerage firm that interfaces with its customers over the Internet rather than face-to-face at a brick and mortar office location. Online brokers tend to offer lower fees and do-it-yourself investor resources.

A broker is an individual or party that negotiates transactions between a consumer and a seller, they also get a portion of the total sales when the negotiation is finalized. A broker also serves as a consumer and a seller; other defines them as an agent. Brokers do exists in different types of industries such as; real estate, food, logistics or clothing industries. They serve as the third person or a facilitator between buyer and the seller.

Different Types of Brokers

Insurance Broker
This type of broker works with different insurance companies, providing the best available policies for his clients. Insurance broker is different from a typical agent; however they do have similarities with the service that they offer such as; providing structure policies, settling customer’s claims and usually works on a commission basis.

An insurance broker is specialized in one specific type of insurance or deal, these are; Health, life, home, auto and other types of insurance. Some insurance brokers are required to undergo training and must acquire formal licenses from the Security and Exchange Commission or other government associations that deals with investments.

Real Estate Broker
A real estate broker is a person who helps the seller to sell a property; he serves as an intermediary between buyers and sellers. Although they have a big role between the seller and the buyer, a real estate broker does not have the power or right to make important decisions on the client’s behalf. He must also acquire a formal license before proceeding with any transactions; he is required to take a 90-hour course and must pass an exam on a real estate law. This type of broker usually has salespersons known as the “real estate agents” their role is to assist the broker in the selling process.

Stock Broker
Main role of a stock broker is to trade stocks on behalf of his clients through a brokerage account, these stocks are the mutual funds and bonds. Stock brokers usually charge a commission per trade. There are also two kinds of stock brokers, and these are; Discount brokers and full-service brokers.

High-End Broker
High-End Broker’s job is to study and plan the condition of the economy, this type of broker usually have a team of researchers, they study the status of the market and give advises to their clients on when is the best time to buy or sell a property. Clients of a high-end broker are usually people in the high society level.

Online Broker
Online brokers works through different brokerage websites. Presenting investment database information for their clients via online is their main role, database information includes; graphs, charts and investment tips.

Discount Broker
A discount broker carries out buy and sells orders at a reduced commission, compared to a full service broker, but he doesn’t provide investment advices.

There are several things to consider when choosing a broker.

 1. Markets
The most important is that the broker should enable us to trade in the markets we are interested in. Major brokers offer trading in practically all US markets and exchanges.

 2. Maintenance Fee
There are two basic things your broker can charge you. The first is a fixed fee for maintaining your account – which you pay whether you trade or   not. The second thing you pay to your broker is commission, which is paid for every trade you make. Discount brokers normally do not charge         any maintenance fees.

 3. Commission Per Share
Yet, there are big differences between them regarding the commissions for trades. Some brokers set the commission for a trade according to the       amount of shares that are involved in the trade. Such brokers are most convenient for investors and traders that trade stocks in smaller volumes     (as a rule, less than 1000 stocks per trade). Interactive Brokers or Lightspeed set their commissions in this fashion.

4. Commission Per Trade
On the other hand, there are brokers offering the same fee for one trade regardless the amount of shares involved in the trade (so called flat fee). These brokers are suitable for traders (or investors) who trade in larger volumes (more than 1000 stocks per trade).

5. Inactivity Fee
Nonetheless, with some brokers you have to be aware of the fact that if you do not make a minimum amount of trades for a certain period, you       will automatically be charged an inactivity fee for example at Interactive Brokers or TradeStation.

6. Minimum Deposit
Besides, another thing to consider is that most brokers require you to make a certain minimum deposit in order to open an account. This is           usually several thousand dollars. Although, there are even brokers that require a minimum deposit of $1, and hence they in fact require no minimum deposit to be made.


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