Who is a Stockbroker and How to Choose the Right One?
An individual or a firm that performs as the middleman and conducts financial transactions on behalf of the other party is called a stockbroker. They act as an agent between the individual buyer and seller for the product and/or service.
When it comes to the sale and purchase of financial instruments, brokers have become the go-to option to make convenient transactions. Brokers also have the necessary tools and knowledge one requires to trade in the market.
However, that’s not only all brokers do! They provide services like managing your portfolio, conducting research on the stock market, and clarifying all the queries that their clients may have.
There are brokers in every market, including finance, real estate, commodities, and antiques.
Transactions on the stock market take place online, and brokers provide multiple platforms through which investors and traders can access the market.
If you want to know more about stock brokers, keep reading and find out what a stock broker does.
What does a Stockbroker do?
Although the transactions take place online and nowadays the availability of the internet makes it convenient to trade, it is still impossible for ordinary people to buy stocks straightaway from the exchange.
They require someone to carry out the trade or the transaction. Such middlemen are called stock brokers as we mentioned earlier.
However, what do they do, you may wonder?
The stockbroker has to facilitate the buying and selling of stocks on behalf of the investors at the stock exchange. Stockbrokers are authorised by SEBI to accept the request of the investor and execute the same. The secondary function of a stockbroker is imparting knowledge and expertise about the financial markets and how they function.
Stock brokers implement investors’ purchasing or selling decisions keep records of transactions and statements, and communicate the sale and purchase transactions of the client on the same day. At Goodwill, we ensure our clients get immediate text messages after every transaction.
For this service, they receive a commission or a fee from their clients.
Buying and Selling
The stockbroker has the basic responsibility of buying stocks on behalf of their clients. This, they may do depending on the order of the client.
Just like buying, another responsibility that a stockbroker has is to sell the stock on behalf of the client. Here, in this case, the stockbroker can only sell stocks based on the client’s order.
Apart from this, stockbrokers can provide information to clients about new investment opportunities in the market or help them make changes in their strategies.
Proficient stockbrokers will cover everything in their research: accounting, economic and technical analysis of different companies and stocks. Their research becomes the foundation of their feedback to their clients.
For example, if a stockbroker suspects that a client’s stock will drop extravagantly, they will suggest he sell when the price is still low. Contrary to this, if they suspect the price will rise significantly, they may ask the client to hold the stock or buy the stock.
A stockbroker will also recommend to the client which stocks he should buy and which can be added to his financial portfolio. Moreover, a stockbroker specifically looks for stocks that will bring profit to the client based on their research and analysis.
Another function of a stockbroker is to find potential clients and build a strong customer base. They will do this by writing articles in magazines and newspapers, calling potential clients, and through digital marketing as well.
Through referrals from other individuals and organizations, a stockbroker can still get new clients. A stockbroker may even find a place to market his services by attending social events.
How to Choose a Stockbroker Carefully
There are a few factors to consider while choosing a stockbroker.
You need to understand that not all stockbrokers are right for investors. Your broker should be able to meet your financial goals. What’s more, they should be primarily authorised by SEBI, which gives more authenticity and credibility to their services.
The background of the broker matters and what others are saying about the broker matters too. Choosing a stockbroker takes just as much research as choosing to buy a stock, a house, a car, or a life partner.
Nowadays, there are many stockbrokers available who offer their services to people who want to create, preserve, and enhance their wealth. Therefore, you need to choose your stockbroker correctly.
You must choose someone who understands your financial goals and guides you towards steady profits.
For example, if you buy a share for 100 Rs. And after 2 hours or so, the share price comes down to Rs. 94, and you will think to sell your share immediately but you will incur a loss. What your stockbroker can do in this situation is this: they can help you retain your share in your Demat Account and sell the same when the price goes high. By doing this, you will take delivery of the share and sell it when the price goes up through your stockbroker.
Moreover, you should get to know your broker as much as possible before choosing them. Take a look at a few points you can keep in mind while choosing the best share broker in India
Having a broker who carries deep knowledge and expertise in technology provides an added advantage to the investors. Brokers need to continuously update their platforms with the latest technology by offering new platform features and solutions.
Since trading is ever-evolving and stock-broking-related technology is complex, a stockbroker with an in-house technical team will be a good choice. Make sure your broker also has an excellent track record in providing a steady and trustworthy platform and performance.
Transparency is an important factor when it comes to selecting the perfect stockbroker. To avoid any surprises in the future, you must make sure your stockbroker does not levy any hidden charges.
To ensure this, you must check if all their pricing policies are published on their website in great detail. Similarly, all charges involved must also be communicated both by the stockbroker and mentioned in the portal in detail before you open any account.
Every Stock broker will charge a certain brokerage fee. Don’t be lured by the lowest brokerage for trading in India
. Always compare the charges, features and facilities with other stockbrokers before you select one.
You must perform a thorough background check of the stockbroker before you give them access to your trading decisions.
Get to know the years the stockbroker has been in business, how it has been performing, and what the clients have to say about them.
This will allow you to know more about the stockbroker in detail so you can make a wise decision. Moreover, you should search endlessly for other stockbrokers and compare their performance.
This factor not only applies to stockbrokers but also to the stability of websites and mobile applications. None of them should fail you during peak hours or especially when you have some issues.
The stockbroker should be available during stock market hours so that they can execute orders without any delay. The pages of the apps should load easily and quickly because even a small delay will lead you to lose out on profits.
Before you decide to start your investment journey, you should not only know which stocks you’re interested in and which ones to buy and sell. You should also know how you can trade easily with the help of stockbrokers.
Start your Investment Journey with Goodwill!
Goodwill Wealth Management is a brokerage firm that has an online platform that lets you trade in the stock market with the lowest brokerage for trading in India
You can start trading by opening a Trading Account and easily store your delivery shares through the Demat Account
. You can also use the GIGA
App to carry out trading right from your fingertips. On top of this, you will also get research calls and regular market updates! As India’s best equity broker
, Goodwill always provides all the necessary support, including technical support, at any time. Why wait? Start investing with Goodwill now and experience the joy of trading through Goodwill.