Stockbrokers are the middlemen between the customers and the stock exchange. When individuals or corporations want to buy stock or sell stock, they must go through a brokerage house because only members of the stock exchange can perform transactions. Stockbrokers determine the best investments for their clients after gathering information from them about their financial abilities and their needs. He or she does this also to understand the level of investment risk the client is comfortable with. The stockbroker then sends the order out to the floor of the securities exchange via computer or phone. Once the transaction is completed, the broker supplies the client with the price. The stockbrokers earn their income through charging commissions on every transaction that goes through them. Their commission is known as the term “brokerage” and it is charged against the service that a broker provides to its customers.
When deciding upon what type of stockbroker you would like to use when investing in the stock market, you must first decide if you would like a full-service or a discount broker. Full-Service brokers offer a variety of financial products, as well as investment advice, investment strategies, and research. They charge higher fees and they may offer stocks, bonds, annuities, derivatives, and insurance. A full-service stockbroker is compensated by how often you trade, and not according to how well your stock portfolio performs.
Discount stockbrokers do not offer advice or research and they charge lower fees than full-service brokers. They transact trades with no added extras and they manage fewer products. They sometimes offer online computer order entry services and are usually paid a fixed salary to execute trades in the stock market. Discount stockbrokers do not solicit, and they are not paid commissions. Those that have the lowest prices and the best service, get the most trades. They make their money by doing business in quantity and typically compete on price and on the dependability of their services.
Regardless of the type of stockbroker, you decide to use, the very first thing that you should find out is if that broker is registered under the Securities and Exchange Board of India (SEBI). As long as the broker is registered under SEBI, then he or she remains accountable to you at all times when playing the stock market with your money. You also need to investigate the history of a stockbroker. The best way to do this is simply by asking around. Consult your friends, fellow investors, and relatives. Also, always ask your stockbroker to provide you with a few names of their current clients who have a similar background and investment plans as you have.
Be sure that you keep in mind your investment goals and the types of services that you are looking for when choosing Best Discount Brokers in India. Know the stock broker’s investment philosophy and how that brokerage firm chooses to work with its clients. Be sure to find a stockbroker whose services match your needs and do this by knowing the details of what services they provide in order to make money investing in the stock.