What is a Broker: Definition and Types?

You don’t need a grammar lesson, but the definition of broker seems like a word that gets slapped with multiple fields. Moreover, as the word broker defines various financial areas, people who are not experts in economic affairs will not understand the term clearly. Thus, we have tried to specify the definition in a way that anyone can easily catch.

What is a broker?

According to the article by en.meteofinanza.com, a broker is an individual, firm, or company that acts as a financial intermediary between buyer and seller in the stock market. They are the certified middleman who carries out the financial transaction on behalf of the third party.

The broker is usually an essential element in the sale and purchase transaction of financial instruments. They have the tool to operate the trade phenomenally. In addition, they advise, study the materials, analyze the market data and manage the client profile. And such third parties are hired by the buyer or seller to take direction in the financial decision. In exchange, they charge a fee or commission, depending on the type of broker they are.

Different types of brokers

Although the primary duty of the broker is to assist the client in the financial matter, the role can be different depending on the type. Primarily, the broker can be categories in four sections discussed below:

Stockbroker

Let’s start to form the primary- stockbroker, which is also known as the investment broker. Stockbrokers involve the client to buy and sell securities in the market. Investors who cannot trade independently go to those license intermediaries affiliated by a particular stock exchange, who later perform trading on-behalf of them.

Forex broker

Unlike the stock market, forex is open 24 hours a day, five days a week, and facilitates exchanging the forex currency. The currency market is the most liquid market globally that consists of a large number of investors. A forex broker provides the service to buy and sell foreign currency in a capital market and perform the transaction on behalf of the client. The asset is a duet in this market where one currency is paired with another, showing the value to trade.

Financial advisor

The financial advisor is also known as the full-time service broker who helps the client with investing plans. They mainly serve as the all-in-one solution when it comes to handling any trade-related issue. Besides providing a suitable trading platform, they work as the personal advisor of the client. From buying and selling the stocks to tax-saving service and portfolio management, the financial advisor covers everything on behalf of the client.

Discount broker

Compared to other brokers, a discount broker is less comprehensive. They offer the mare task of carrying out the operation requested by the customer. They generally do not provide financial advice. Instead, their focus is to provide the platform for you to trade securities. A discount broker is perfect for someone who does not want to pay a high commission in exchange for trade service.

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