A novice investor willing to trade on a stock exchange immediately faces the fact that they will not be able to enter it on their own. It is necessary to make an agreement with an intermediary who will simultaneously represent the interests of the client and also ensure that the latter fulfill obligations to the state, in particular, pays income tax. Therefore, the first task to be solved for the beginner is to find a good broker.
What Functions Does a Broker Perform on Exchanges?
The first and main function is to provide individual traders with access to exchanges. It does not matter whether you trade on your own or through the popular and rapidly developing copy trade; it is the broker that opens a door to various markets.
The broker will realize your orders on your behalf. Some extremely suspicious clients may think that the broker may make a mistake and thereby put their capital in danger. In fact, the broker does not make any decisions regarding your investments. You build all the strategies yourself or follow copy trading. And the broker only implements your decisions.
The broker may provide you with leverage so that you can scale your trades and earn more. In this case, your profit will be exclusively your profit, and you do not need to share it with the broker, even if the leverage is 1:3000. However, if you suffer losses, the broker will set a stop loss for you to prevent possible losses.
The broker provides a quick and comfortable withdrawal of funds from the stock exchange. But at the same time, they will keep not only their commissions but also the tax on profits, which will go to state accounts.
How Do I Communicate with a Broker?
Usually, brokers offer the client to choose a form of communication convenient for the latter. Of course, you may prefer to communicate by phone, but this is an old-fashioned and redundant form, which is seriously inferior to modern multi-functional marketplaces. Use MetaTrader 4 download PC, and you will get a lot of benefits in the form of
- numerous indicators
- news that may affect the value of the assets you are trading
- copy trading opportunities and much more
Can I Try Trading Without a Broker?
Purely theoretically, you can set such an aim for yourself, but it is unlikely to find its practical implementation for many reasons:
- You need to obtain the right to conduct financial activities in the market.
- To do this, you need to register a company because exchanges work only with legal entities.
- You need to pay high fees and get a lot of permits.
- Some certifications require you to take exams.
- You will also need a brokerage license; only in this case will you be the broker yourself.
- You are unlikely to be able to conduct your personal brokerage activities on your PC because powerful equipment is required to carry out all trading operations. So be prepared to pay for it.
And these are far from all the tasks that brokers must solve before starting their activities. Therefore, if you are ready to complete them all, you can start. But it is much more rational to find a good broker who will provide you with the full range of necessary services for a small commission.
In addition, a good broker will offer you quality educational materials on all trading issues. They are also interested in you getting the maximum profit. Therefore, becoming a client of a broker, you get a reliable assistant who will contribute to your professional growth.
Transparency and speed of execution of all trading transactions are what traders expect from brokers. The best brokerages provide this and much more, aiming to attract even the most demanding clients.