What is a Broker?
A broker is a person or a brokerage firm that matches investors who want to buy or sell securities (like stocks or bonds) with the other side of their transactions.
🤔 Understanding a broker
Brokers are the most common intermediary that investors rely on to trade various assets. To trade stocks, brokers must be licensed (i.e., registered with the US Securities Exchange Commission and the Financial Industry Regulatory Authority) to pair people who want to buy or sell a security with the other side of the transaction. Although it’s becoming less common, some brokers generate revenue by charging a fee (aka a commission), for each transaction.
There are dozens of brokerage firms in the US. You’ve got Robinhood (of course) as well as others like Charles Schwab, E* Trade, and Fidelity, which vary in terms of services offered and fees charged.
Online brokers are like professional matchmakers...
They offer a fast and efficient way to place trades and connect with people on the other side of a transaction. They’re registered firms (and representatives) that link investors who want to buy or sell stocks, bonds, and other securities with the parties on the other side of the transactions. Some OG firms charge a commission for the service.
The free stock offer is available to new users only, subject to the terms and conditions at rbnhd.co/freestock. Free stock chosen randomly from the program’s inventory. Securities trading is offered through Robinhood Financial LLC.
You May Also Like
A Nash equilibrium is a stable situation in which nobody has an incentive to change their behavior.
A payroll tax is a tax that employers deduct from their employees’ paychecks and send directly to the government.
Preferred stock is a breed of stock that gives investors a higher claim to payments from a company (aka dividends), but usually no voting rights.
A penny stock is stock in a small company with shares that trade for less than $5, offering potentially high rewards but also significant risks.
Business-to-business (B2B) is a phrase used to describe any sort of transaction or engagement between a business and another business rather than a business and a consumer.