How to Use a Stockbroker

Many savvy investors claim that the three main things you need to play the market are money (to start out), time (to research stocks) and a good stockbroker to help you make informed decisions in a timely manner.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Brokerage Accounts

1. Research various brokers, familiarizing yourself with the difference between full-service brokerages and discount brokerages.
2. Evaluate the brokers' fee schedules, services and procedures, selecting a brokerage that meets your needs.
3. Read the fine print in the brokerage agreement and ask questions.
4. Establish a cash account with the brokerage of your choice.
5. Research stocks and follow market news. When you decide to buy or sell, know what price you are willing to pay or what price you want to get for the stock.
6. Call the broker and ask for a quote on the stock you want to buy or sell. The quote tells you the highest price anyone is willing to pay for the stock and the lowest price at which anyone is willing to sell.
7. Decide what kind of order to place. You can place a market order, asking your broker to get the best price available at that moment, or you can place a limit order, asking the broker to buy or sell only when the stock reaches an agreed-upon price.
8. Place the order.
9. Get confirmation. The exchange on which the stock is traded will send the broker an electronic confirmation of the trade. You will receive written confirmation - and the bill - by mail.
10. Make sure the broker complied with your order.

Tips & Warnings

• Discount brokerages charge as little as $5 a trade; full-service brokerages may charge $150 to $200. Use the discount broker if you don't need advice, research or other help with your trades. Use the full-service brokerage if you need help, don't have time to do much research and can afford the steep fees.
• Go online. Many discount brokers will let you set up an account and execute your trades over the Internet.
• Ask for help. If you feel uneasy about using a discount broker, ask someone who has done it before to assist you.
• Investing in the stock market can be a rewarding and lucrative way to make your money work for you, but make sure you know what you are doing. Ignorance can cost you thousands of dollars. Don't be afraid to ask for advice.