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The Profession Of A Stock Broker by Tarun Jaswani

Money Observer is a monthly personal finance and investment magazine published by Money wise Publishing Ltd. Money wise Publishing Ltd. has acquired Money Observer from the Guardian News Media in February 2008. First published in October 1979 as a supplement in The Observer, the magazine has expanded from just 12 pages, to an average of 100 pages per issue.

In addition to a string of successful share tips, the award-winning editorial team offers specific advice designed to help readers find great deals from savings accounts to stock broking. A stock broker or stockbroker is a qualified and regulated professional who buys and sells shares and other securities through market makers or Agency Only Firms on behalf of investors.

Stock brokers also sometimes or exclusively trade on their own behalf, as a principal, speculating that a share or other financial instrument will increase or decline in price. In such cases the term broker makes little sense and the individuals or firms trading in principal capacity sometimes call themselves dealers, stock traders or simply traders. A stock broker is just the main part of being a City Trader. Other types of City Trading include working in the Foreign Exchange.

A stock broker would deal with shares. Shares and stocks have the same definition; a share is a section of a company that a stockbroker can buy and sell if he/she has a suitable amount of money. Specifically, a stock is a piece of money a share of a company that a few years ago were represented on a document, and nowadays spreadsheets are often used to keep the record. For example, a share can be worth 25p, but can be multiplied by 40 to create the total desired value on the document in this case it would therefore be worth 1000p. The stock broker possesses a number of shares; however he or she can choose how many of these he or she wishes to trade, so that perhaps some can be kept for him or her. Keeping an amount is understandable, because stock-broking is a risky business.

This is because the prices that shares are worth are constantly increasing and decreasing, depending on how much money the company you are dealing with, is producing. For example, say a stock broker buys a share from a dealer, for $1, and then sells it to a client for x sum of money. The next day, the price for that same share value, decreases (the company is not producing as much money), so that it's now worth 50p. The stockbroker had spent $1, however, which was 50p too much: he or she has just lost 50p. That's how stockbrokers lose money.

This is a description of the part of a brokerage firm that is client facing. The sales staff, brokers and traders are part of the front office. Functions of the front office include acquisition and entry of orders, fulfillment of the orders, and all the regulatory reporting for the orders. The back office is where the clearance processing of the trades is done. Transfer of securities and money and the tracking of failure to deliver are handled. Securities lending for a brokerage firm, wherein shares of a security that is being sold short are located to ensure they can be delivered, is usually included in the back office as well. A bull is a term used in the stock exchange market to refer to a stock market optimist who believes that share prices are likely to go higher, and who acts according to his investment operations.

When acting as an agent, the stockbroker typically charges the client a flat fee and/or a Percentage-based commission for undertaking the trade, and the price quoted the client must be the best price available in the market. When acting as a principal, the trade could be with another market participant or one of the stockbroker's clients. When trading in a principal capacity with client, the broker informs the client and charges the client a markup or markdown from the prevailing market price.

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Article Source: http://www.earticlesonline.com/Article/The-Profession-Of-A-Stock-Broker/403276

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