Who is a broker and what does he do in simple words.

The financial sphere is quite diverse and interesting. Many participants in the process can be useful, so it won't hurt to know who a broker is. Moreover, to better understand who this specialist is (in simple terms) and what he does.

When figuring out who a broker is and what he does, it is worth mentioning all his functions. After all, they may come in handy in the future. Additionally, it's important for those interested in stocks to understand who a broker is.

Who is a broker and what does he do?

So, what is a broker in simple terms: many know that brokers are involved in buying and selling stocks or other financial instruments, but not everyone fully understands who brokers are and what they do. A broker is an intermediary who helps his clients make transactions in financial markets. Essentially, he sells his knowledge and understanding of how the market works. However, his role does not end there. A broker can be a very useful intermediary.

Most often, a broker is indeed an intermediary between a seller and a buyer. However, this refers to the financial market. This intermediary can work with both individuals and large companies. The main task of the broker is to ensure the execution of transactions, such as the buying or selling of stocks, bonds, currencies, and other assets. But the broker's functions and responsibilities do not stop there.

A broker is not a consultant (he conveys information); he is more of an advisor. That is, he interprets certain information from the financial market. To become a broker, one needs a special license. The license confirms that the person has sufficient knowledge and experience to work in financial markets and complies with the laws and regulations established by regulatory authorities.

What does a broker do?

Special attention should be paid to how a broker can be useful. In general, a broker's work includes several key functions, each of which is important for successful transactions in financial markets.

A broker is definitely needed to execute trading operations. The main task of a broker is to buy and sell securities or other financial instruments on behalf of his clients. To understand how this works, it's worth providing an example. A broker's client wants to buy stocks (of a certain company), but he doesn’t understand much about it. So he goes to the broker, who looks for suitable options. He also conducts the entire operation on the exchange. That is, the client gets everything he wants, but doesn’t have to spend Time learning the entire process.

Of course, often a broker simply advises clients. More often, the consultation pertains to which assets are better to buy or sell. In this matter, the final decision is made by the client himself, but brokers can provide recommendations based on their experience and analytical data. It's also important to understand that a broker is more of a practitioner than a theorist.

What else is important to know: individuals or companies cannot just come to the stock exchange and start trading stocks. For this, they need an intermediary - a broker, who has access to the exchanges. The broker is licensed for this. That is, without him, it will not be possible to make a purchase in any case. Brokers have special software and licenses that allow them to execute transactions on various exchanges.

Some brokers provide investment management services. In this case, they not only execute clients' orders but also make decisions about which stocks or bonds to buy to increase the client's portfolio yield. Such brokers are called asset managers. This is a more complex job, and not all brokers engage in this. Additionally, they receive a larger commission for this.

What other functions does a broker perform?

Brokers can also provide their clients with access to analytical data, company reports, market forecasts, and other research. This helps investors better navigate the world of finance and make informed decisions. To begin with, brokers conduct all these studies themselves. Therefore, such work is very demanding.

What types of brokers are there?

Due to the large number of responsibilities, there are also many types of brokers. There are almost no so-called universals, and they charge very high fees for their services. In general, there are several types of brokers, each of which offers its services depending on the clients' needs.

The most common types are:

1. Securities brokers. This is the most common type of broker that deals with buying and selling stocks, bonds, funds, and other financial instruments.

2. Forex brokers. They deal with trading currencies on the international foreign exchange market (Forex).

3. Commodity brokers. These brokers work with commodities such as oil, gold, agricultural products, and metals.

4. Mortgage brokers. This type of broker helps clients obtain mortgage loans.

There are also insurance brokers. They help clients choose insurance products such as life, health, property, and auto insurance policies.