Stockbroking – The Comprehensive Guide

stock exchange

Getting Started on the Stockbroking Ladder

If you have a burning desire to invest in stock and shares, hiring a professional and knowledgeable broker is the correct avenue to go down. The broker will buy and sell the shares for you and hopefully make a sizeable profit on your behalf.

Trading in stocks and shares can be a risky, yet worthwhile venture; however, you have to make sure you choose the correct broker who will be navigate you through all of the rigmarole, so that you can make informed decisions. There are a range of stockbroking options you can decide to use and many of these firms have a variety of ways when it comes to operating. Thus, do your research and choose a firm that is correct for the investments you want to make. Essentially, you do not want to go into the stocks and shares market with the proverbial blindfold on.

Making the right choices is imperative if you are going to succeed. CMC Markets are experts in the field of stockbroking and really offer worthwhile advice in how to invest in stocks and shares professionally.

Is Share Dealing the Correct Pathway?

Before you even consider share dealing, there are some areas you need to investigate to ensure you are financially capable and ready to go into the marketplace.

– Make sure you are debt free, apart from your mortgage

– Ensure you have life insurance and this is even more important if you have children

– Look at your employer’s pension scheme and ensure you are tied into a pension scheme that you have had a sat in

– Check the protection you would receive (from a work income protection policy) if you suddenly became extremely ill

– Ensure you have savings (at least six months worth), if you were to suddenly lose your job.

Even if all of the above are in place, you need to know that getting involved in this sphere can be extremely risky and if you have any doubts it is probably best to the investment fund or unit fund route to ensure investments are kept safe. The latter options are a better way of pooling your savings, as you are investing with other savers in many businesses, rather than just focusing on your own.

If these the aforementioned options are not tightly in place then it would be informed to make more savvy investments elsewhere, in order to protect your capital.

Stockbroking Services

Stockbroking firms come in a range of shapes and sizes, offering a whole host of different services, tailored specifically to the need of the client. This is all dependent on your level of knowledge in relation to the industry, how confident you are with investing in this sector and how much time you have actually invested researching the market properly. Remember, the more involvement the broker has in dealing with your investments, the higher the fees are likely to be. You’ll tend to pay higher charges if you seek more advice, meaning that the more worthwhile research you do yourself, the more money you will save.

Execution Only Services

Execution-only options means that the stockbroker you employ makes trades based on the laid-out instructions given by you as the client. Trades of this nature are normally made electronically or over the telephone. This particular type of stockbroking relationship is more akin to those with greater experience in this sector, who have knowledge when it comes to trading.

This is a relatively cheap service, but you are investing directly in the stocks and shares sector and this can be risky. Thus, you need to be ready for potential losses.

A few stockbroking firms offer execution services only and may also opt to provide you with the most up-to-date online research in order for you to trade properly. Furthermore, a lot of this brokerage firms provide funds and are more commonly known as ‘fund supermarkets’.

Discretionary Options

If you do choose a discretionary service, it ultimately means that a broker can make trades (buying and selling) without consulting you. Therefore, deals on the stock market can be done instantly and the broker can respond to market fluctuations and grab opportunities as soon as they appear.

However, the minimum investment made through this service would be around £100,000.