Everything You Need to Know About Stockbrokers

Now that you’ve learned the basics of the stocks market, you probably can’t wait to place your first trade. 

Am I right?

But before you go out to the wild that the stock market is, there is another important thing we need to cover. 

Stockbrokers!

Without them, you’re just a bundle of knowledge.

Just like a plumber without their tools.

Or a barber without their clippers.

Or a pilot without their plane. 

… okay you know where we’re going with this so back to the point!

What are Stockbrokers? 

Stockbrokers, also known as the middlemen, are regulated financial intermediaries that enable the buying and selling of securities.

They either make or take liquidity depending on the type of order they place.

Without them, there would be no transactions. 

Stockbrokers handle all transactions, including institutional and retail customers. 

Sometimes, broker-dealers and brokerage member firms are also called stockbrokers.

FUN FACT: In the 1900’s the only way for people to invest directly in stocks was to hire stock brokers to place stock trades on their behalf.

How do Stockbrokers Work?

Now, if you’re new to the stocks market, when someone says the word ‘stockbroker’, the scene with Gordon Gecko in Wall Street may come to mind. 

And whilst that might have been accurate a couple of decades ago, nowadays especially with the rise of the internet, it’s more accurate to think of stockbrokers as computers rather than middle-aged men in colourful jackets shouting orders on the floor of busy stock exchange.

Now, speaking of stock exchanges, there are sixteen major stock exchanges in the world that have a market capitalisation of over US$1 trillion each. 

Can you guess what they call them?

$1 Trillion Club.

Yup, that’s right.

#$1TrillionClub

Below is a list of some major stock exchanges worldwide.

  • New York Stock Exchange
  • NASDAQ
  • Tokyo Stock Exchange
  • Shanghai Stock Exchange
  • Hong Kong Stock Exchange
  • London Stock Exchange
  • Euronext
  • Shenzhen Stock Exchange
  • Toronto Stock Exchange
  • Deutsche Boerse

There are of course many, many more members of the stock exchange around the world.

But more on that later on. 

But whether it is a computer or a person, and whether you are in the United Kingdom, India or Hawaii, the bottom line is that all traders need a stockbroker to invest. 

The Role of a Stockbroker

Your broker is so much more than a platform for placing trades.

In fact, some may say that it is a crucial step in one’s trading career ensuring they pick the right one (No pressure).

There are thousands of brokers out there so how can you make sure you chose the right one for you? What features are you supposed to look for? 

Deposit options?
Withdrawals?
Fees?
Leverage?
Minimum deposit?
Execution speed?
Capital requirement?

I could go on and on – there are so many different factors to consider! 

And in all honestly, it can get SUPER overwhelming, especially for new traders! 

But that’s where we step in!

We understand that not everyone likes to do their research!

That’s why we had our mentors with more than 50 years of experience combined to try out and analyse the biggest names in the stock brokerage game.  

Yes, that’s right! We mean it when we say we want to make your life easier!

Let’s take a closer look at the features we (and you should) consider.

Features to Consider When Choosing your Stockbroker

Choosing the right stockbroker will have a significant impact on your overall trading experience and is a decision that should not be taken lightly.  

Also, consider 

Below is a quick checklist of things all traders (and/or new clients) should take into consideration when choosing their stockbroker. Ensuring your broker covers such services is crucial when choosing the right one for you. 

  • Are they regulated?
  • How much are the fees?
  • What is the required deposit?
  • Do they offer live customer support? 
  • What is their execution speed?
  • How many stocks can you access through the broker?
  • How much control the client can have over which shares they trade?
  • What do their customers say about them?
  • How is their withdrawal process?
  • What online platform do they support?
  • How do they handle transactions?
  • What leverage do they offer?
  • What trading platform do they support? 

The Most Important Features to Look for in a Stockbroker

Here are the top five things that you should fulfil your trading needs when choosing a stockbroker.

1. Security

First and foremost, you must ensure that a broker offers a high level of security for your funds and investments. After all, you’re not just going to hand over your hard-earned money to someone who simply claims they’re legit, right? It is crucial to ensure they are registered with a financial industry regulatory authority.

2. Transaction Costs

Every time you buy or sell stock shares, you will have to pay for either the spread or a commission so it is only natural to look for the most affordable rates.

Sometimes it’s better to sacrifice low transactions for a more reliable broker, it’s always worth it in the long run!

3. Deposit and Withdrawal

Good stockbrokers will let you deposit funds and withdraw your earnings without any hassle. You should make sure that your broker’s withdrawal process is smooth and speedy.

Some online brokers also offer more methods of funding than others, it’s important for a good broker to offer a wide range of deposit and withdrawal methods.

4. Execution

It is critical that your broker fills you with the best possible price for your orders. The speed at which your buy and sell orders get filled is super important.

5. Customer Service

Stockbrokers ain’t perfect. So it’s important you pick a broker that you can easily get in touch with if any issues arise. The competence of brokers when dealing with support issues is just as important as their performance on executing trades.