Have you been thinking about taking part in the successes of the stock market as an investor? You mostly are. So, how are you planning on doing that? Through a trading platform or a broker? Wait, did you think the two of them were the same? If you did, don’t worry – a lot of people do think that, too; it is a rookie mistake, though. So, before you do start off with the stock market – you might want to know this. Since they are the two best ways you can get into the market, you might want to know them through.
Who is a Stockbroker?
A stockbroker is a financial expert who places orders on behalf of clients in the market. A stockbroker is sometimes known as an investment advisor or a registered representative (RR).
The majority of stockbrokers work for a brokerage business and deal with a variety of single and institutional clientele. These stockbrokers are typically compensated on the basis of a commission, though this differentiates by the job.
A stockbroker is a generic term used in describing brokerage firms and broker-dealer corporations too. Both – the full-service and the discount brokers would fall into this category. As they execute trades but do not provide personalized investment advice. Now, yes, these brokers would charge you – and you can use a brokerage calculator online to know how much you would be paying.
Most internet brokers – at least at their most basic levels of service, are discount brokers, meaning trades are handled for free or for a tiny set-price commission. Many online brokers now offer higher-priced premium services.
What is a Trading Platform?
A trading platform – is known as a piece of software that would allow the investors and the traders to place orders and also keep track of their accounts without the use of financial intermediaries or middlemen. Trading systems are often packaged with additional services, including real-time quotes, news feeds, charting tools, and even paid research. These platforms could also be customized for individual markets, such as stocks, currencies, options, and futures.
Prop trading platforms and commercial trading platforms are the two types of trading platforms today.
1) Commercial platforms: As the name does imply, it caters to day traders and the retail investors of the stock market. They are featured by the ease of use and a variety of useful tools that an investor can use for education and research. These are inclusive of tools such as news feeds and charts.
2) Prop platforms: Prop platforms, on the other hand, are customized platforms that are created by larger brokerage firms to meet their specialized needs and trading styles.
What is the Major Difference Between a Trading Platform and a Broker?
A broker is essentially a salesperson whose duty is to negotiate on behalf of the trader as well as the other buyers and sellers in the transaction. They usually work for companies and buy and sell stocks and securities on behalf of a trader who has provided funds for investment.
A trading platform – on the other hand, allows traders to use the platform as an intermediary to open, close, and manage trades. Brokers frequently provide trading platforms so that traders can do their own trading as long as they make a certain number of trades in a certain length of time. When it comes to internet trading, both brokers and trading platforms offer advantages and disadvantages.
When it comes to some aspects of trading, it doesn’t really matter which approach you choose. Short selling, for example, can be done through a broker or a CFD (contract for difference). On a side note – short selling is the act of selling an asset that you don’t own in the hopes that its value will have declined by the time the transaction is completed, allowing you to profit.
This could be established through the use of a broker, who will sell the item for you, provide credit, and allow you to purchase the asset to return to the broker.
CFDs on a platform, on the other hand, might be utilized to accomplish the same thing and trade on leverage if the CFD price declines throughout the deal.
However, using a broker requires someone to be willing to lend the shares in the first place. Therefore a CFD may be the best alternative.
What to Choose?
Whether you utilize a broker or a trading platform relies on your level of trading confidence. Some beginners prefer to work with a broker, while others believe that a trading platform can provide the same level of information. Both serve as mediators, with trading platforms allowing additional anonymity for buyers and sellers and brokers negotiating between them.
Fees are another crucial factor to consider when choosing a trading platform. Traders that utilize scalping as a trading method, for example, will seek out platforms with cheap fees.
Well, you can use both these sources to start trading or investing in the market. But, you know what stands in the line of it? Your experience. So, if you are inexperienced, you can always choose a broker for professional help, and if you are experienced – you know your options.