You know those people on the trading floor of the New York Stock Exchange (NYSE), yelling and throwing hand signs at each other? Well, most of those people are called stockbrokers. Before the surge of the World Wide Web, stockbrokers’ main purpose was that of a “matchmaker”. They would match a buyer and seller of the same security together.
Today, this is still part of a broker’s role, but the Internet has made the buying and selling of securities extremely easy. Stockbrokers usually act as financial advisors, providing clients with research and information on various investment strategies. They reduce the effects of rash decision-making by using their experience and expertise rather than emotions to perform their job.
Don’t let the name stockbrocker fool you. They deal with all types of securities, both on public stock exchanges and over-the-counter.
Stockbrokers are paid a commission or fee for each trade they perform. These fees may also include percentages on profitable sales of stocks. Some brokers may charge a quarterly or annual fee instead.
Brokers do not necessarily have to be individuals. There are also brokerage firms that are entire institutions facilitating the trade of financial securities. Some notable firms are: Merrill Lynch, Goldman Sachs and JP Morgan Chase.
Watch this video to learn more about the stock market and what a stockbroker’s role is in it.