To buy or sell a stock, you usually use a traditional or online brokerage house , an investment firm that is a member of a stock exchange . A number of large companies offer these plans and charge only a minimal fee to handle your transactions. If you sign up, your dividends are automatically reinvested to buy more shares, and you can make additional cash purchases as well. Though you probably use the term broker to describe all the professionals who buy and sell stocks, the financial markets use other, less widely recognized titles to describe the ways securities change hands. Brokers handle buy and sell orders placed by individual and institutional clients in return for a commission.
Dealers buy and sell securities for their own or their firm's account rather than for a client.
For example, if you want to sell shares, a dealer might buy them for the firm. Dealers make their money on the difference between what they pay to buy a security and the price they can get for selling it. Frequently dealers are also described as broker-dealers , since they may fill both roles. Traders , also called registered or competitive traders, buy and sell securities for their own portfolios. The term traders also describes those employees of broker-dealers who handle the firms' securities trading.