{"id":79,"date":"2019-02-27T12:13:08","date_gmt":"2019-02-27T09:13:08","guid":{"rendered":"https:\/\/roboforex.com\/blog\/?p=79"},"modified":"2023-09-06T14:38:01","modified_gmt":"2023-09-06T11:38:01","slug":"what-do-we-need-brokers-for","status":"publish","type":"post","link":"https:\/\/roboforex.com\/blog\/2019\/02\/27\/what-do-we-need-brokers-for\/","title":{"rendered":"Why Do We Need Brokers For?"},"content":{"rendered":"\n

First of all, there is a standard definition, which implies an intermediary or a third party to a transaction that receives remuneration for provided services. Remuneration usually takes the form of a commission. A broker<\/a> is a term not only for financial markets: brokers provide their services in many different fields, but the general principle of their operations is similar. However, a stock exchange is a completely different world, that’s why it is important to provide more detailed description of what brokers do and what their key functions are.<\/p>\n\n\n\n

<\/span>Who are brokers?<\/span><\/h2>\n\n\n\n

Stock exchange transactions are performed by professional market players and if investors don’t belong to any of them, they require a broker. Individuals can’t just appear on stock exchanges and buy or sell an asset (from currencies and stocks<\/a> to securities and precious metals) they are interested in. A brokerage office is that professional participant of financial markets, which has the right to provide its clients (both individuals and legal entities) with an opportunity to open a trading account<\/a> and send an order<\/a> to buy or sell. A broker will operate with the above-mentioned order on stock exchanges.<\/p>\n\n\n\n

Relations between brokers and their clients are regulated by an agreement. Under this agreement, brokers represents their clients on stock exchanges, because brokers are considered to be professional participants we mentioned earlier. On behalf of clients, brokers use clients’ accounts to fulfill the key purpose of trading on the market, i.e placing buy\/sell orders.<\/p>\n\n\n\n

<\/span>Relations between a client and a broker<\/span><\/h2>\n\n\n\n
\"Relations<\/figure>\n\n\n\n

In accordance with a broker’s rules, several accounts are opened for a client. The major private account is opened in a depository: it contains records of all securities that have been bought for a client. In addition to that, a client gets a private money account for performing transactions with their funds.<\/p>\n\n\n\n

From this point forward, a client’s investments is a broker’s job. It is a broker that transfers money to stock exchanges, it is a broker that monitors order execution, and it is a broker that acts as a tax agent. It’s pretty much, isn’t it?<\/p>\n\n\n\n

Brokers don’t use their own funds to trade on behalf of clients. They just forward clients’ orders to stock exchanges and receive commission for that.<\/p>\n\n\n\n

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I suggest you to read the article \"How to Choose your Broker: Guide for Beginner Trader<\/a>\" if you are a beginner trader. Everything you need to know first is inside this post.<\/p>\n<\/blockquote>\n\n\n\n

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How to Choose Your Broker: Guide for Beginner Trader<\/a><\/blockquote>