Why Do We Need Brokers to Trade in the Stock Market?

Investing is the option followed by all to increase their monetary value. Investing can occur through various sources and when we research these sources, the most prominent and obvious option for investing after assets is stocks. To invest in stocks we have to rely on the stock market. Investing in the stock market can be quite risky if you do not know when and how to invest. This is the most important reason why we go through Stock Brokers. I am sure you have often wondered, Why we need brokers to trade in stock markets. In this article that is the question we are trying to answer.

What Are Stock Brokers?

First, we would need to understand what stock brokers are. When you wish to invest in the stock market, you have to do this through the exchanges. The two most prominent stock exchanges in India are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). However, it is not possible to buy stocks directly through the exchanges. There needs to be a third party or middleman to execute these trades, these middlemen are known as Stock Brokers. The most important role of the Stockbroker is to facilitate the buying and selling of stocks on behalf of the investors.

Types of Stock Brokers

There are two major types of stock brokers, A Discounted broker and a full-service broker. A Discounted broker is a business that allows clients to buy and sell securities but does not provide advice, research, planning, or other investment services. Clients who use discount brokerages usually have little to no interaction with a real broker. As a result, discount brokerages charge lower fees. But it is always best if you go for a Full-service Broker, A Full-Service broker is a licensed financial broker-dealer firm that provides a large variety of services to its clients, with a wide range of financial services, research, and advice.

Additional services can include portfolio analysis and construction, estate planning, tax advice, access to IPO shares, access to foreign markets, and so on.

Why Do We Need Brokers?

Now going back to the question haunting our minds, why do we need brokers? Brokers are an integral part of the investment scenario of the country, especially with the Stock Exchange. The stock broker being in the market for years helps you to make your investment at the right time at the right place. They also help you manage your investments and money in the Stock Market. A broker helps you to build and manage your portfolio. In addition to investing in stock markets, some stock market brokers also provide additional investment and advisory services, such as mutual funds, futures, options, and commodity trading. The most important reason is, that they provide a higher chance of receiving better returns, by being able to identify and invest in better options than we might not be able to.

Conclusion

To conclude the above question, it is necessary to have a broker to invest in the stock market because they are the most reliable source to depend on when you aren’t sure about the outcome of your investment. Brokers can advise and invest on our behalf, which doesn’t just mean managing our investment but also optimizing our investment portfolio. The knowledge and access a broker has to data on the market, increases the possibility of positive returns. It also gives us common people exposure to learn and interact with the broker, which in turn increases our knowledge about market investment. In addition to all these brokers also open doors to other forms of investment products such as mutual funds, insurance, IPOs, etc. So to invest in the stock market you are always going to need professional help and these professionals are the Brokers.