In addition, brokerage firms must also be licensed and insured to accept customer deposits. This is a major misconception that many individuals have regarding their brokers. If you do find a good one, they are worth a great deal, especially if they understand a wide variety of markets and your trading strategies. Remember, successful traders employ profitable trading strategies that require a broker who can execute orders with precision.
Brokers are the middlemen of trading and building profits is the name of the game.
All brokers get paid a commission each time you place or exit a stock trade. The amount of this commission depends on what kind of service they provide. Full-service brokers have higher commissions because they spend a lot of time researching markets in order to advise their clients. Discount brokers have lower commissions because they simply act as an agent placing the trader s order as well as facilitating the exit. Many discount brokerage firms make more money on the interest on your account than on commissions.