About Stock Market Brokers
A stock market broker is a professional in the world of buying and selling stocks on either the New York Stock Exchange or the NASDAQ stock markets. They may work as part of a larger conglomerate firm, as part of a smaller brokerage, or independently. In recent times, stock brokers have even been able to ply their trade on the Internet, with the help of online trading modules and loosening regulations when it comes to procuring customers for financial management.
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History
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The history of stock market brokers in the United States began in Philadelphia in the late 1700s. The country's first stock exchange was founded on Chestnut Street in that city, and it remained the hub of stock dealings for the next forty years. In the 1820s, however, the primary world of the stock market moved from Philadelphia to New York City, and Wall Street was born. Since that time, Wall Street has become synonymous with the stock market, and it is on this street that many of the most powerful and influential stock market brokers ply their trade. In the latter half of the 20th century and into the 21st century, Merrill Lynch, Citigroup, and Morgan Stanley have been among the top stock brokerages in the country.
Types
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A stock market broker typically takes a customer's investment capital, and puts it either into the stock that the brokerage recommends, the stock he himself recommends, or the stock the customer chooses for himself. If the stock market broker falls more into the first and second categories, he is an investment adviser, as well as a stockbroker. In this role, he will use his study of the market and the surrounding tangents to make decisions on how best to use the client's money in order to turn their investments into profit. Stock market brokers working as investment advisers may work off a fee based on the total assets under their control, by an hourly rate, or on a flat fee basis.
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Function
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A stock broker working as an agent of the client is there mostly for the execution of a transaction. With the loosening of regulations regarding who can trade on the open market, the need for a stock broker middleman is lessening. However, many individuals still feel more comfortable making their stock market trades through a brokerage firm. In this instance, a stock broker will make a commission off the sale of stock, or will be paid a flat fee per transaction. A stock broker may also deal in the foreign exchange market (FOREX), trading off the futures and speculations regarding the exchange of monetary value from country to country.
Identification
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Stock market brokers work with shares of companies. These companies offer shares of their business when they "go public." Companies do this for a variety of reasons, but the primary reason is that it affords the company a great deal of working capital. These shares are worth a specific amount of money, which changes from day to day based on a number of factors. These factors could include sales figures for the company, the outlook for the future, or a recently released quarterly report to investors. The main goal in stock market trading is to buy low and sell high. In other words, purchase shares of a company at a certain price, and then sell it when the price is higher to make a profit. Of course, what makes this tricky is the unknown future, i.e., how much higher could the stock go, or could it sink like a stone tomorrow. For these reasons, the most successful stock market brokers typically advise a strategy of long term investment, which will theoretically see stocks go higher over the long haul.
Alternative
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Some stock market brokers fall under the heading of day traders. These brokers buy stocks in the morning and sell them before the day is through in order to make a quick profit. This form of trading has the potential of making the client extremely wealthy in a short period of time, but it also has the significant downside of extraordinary risk. Because of this shady risk/reward scenario, many serious traders regard day trading as little more than gambling, or playing the lottery. However, unlike the lottery, history has shown that there are proven strategies that can make one a success at day trading. While day trading is now possible for just about anyone who has an Internet connection, it is inadvisable that laymen take up the hobby unless they have money to burn or the close advice of someone with considerable experience in the field.
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