Stock brokers 101

Though traditionally regarded as someone you shouldn't trust, along with lawyers and used car salesmen, stock brokers can be a great asset to a starting investor looking to get decent returns in the stock market. Stock brokers are hired by firms to help sell stock to the people they represent. Ordinary investors do not have access to the floors of the stock exchange so they must go to a stock broker who has connections and the ability to buy and sell on the floors of the NASDAQ and New York Stock Exchange and various world markets.

What stock brokers do

A stock broker's job is to either recommend or facilitate orders between buyers and sellers. In the media and in movies, stock brokers are portrayed as someone looking to sell the next "hot stock" to his clients. Stock brokers are interested in the returns and performance of the investments they sell to clients because they know the better that they can do for their clients, the more likely they are to invest more money. Depending on the type of stock broker you would prefer, there are many different options open to you for your investments.

Full service stock brokers

Full service stock brokers are there to sell you investments and to help you buy and sell your own stock purchases. A full service stock broker might call you during the day to offer an investment that he or she believes will perform well. Generally, an investor keeps money with the brokerage firm the stock broker represents, allowing the stock broker can buy or sell stock when the client desires. Likewise, an investor can call their stock broker to tell them to buy or sell a certain stock for them, even if it is not recommended by the stock broker. Remember, the stock broker's job is to help your buy and sell stock of any kind, not only to sell you stock that he or she recommends.

Discount brokers

Other discount brokers are generally only for investors who like to choose their own investments. Most discount brokers operate through the internet, where the investor can buy or sell through an electronic stock broker, rather than have a face to face or over the phone interaction. This has become the chosen method of investors who like to have more control over their money and minimize the fees associated with traditional stock brokers. Online investing allows you to buy stocks, but you will not get any advice or recommendation from a stock broker on whether or not it is a sound investment. For the beginning investor, a full service stock broker is likely a better option.

Commissions and fees

Commissions are funds that is paid to the stock broker for brokering stock. Because the average investor cannot afford the millions of dollars it costs for a seat on the stock exchange, the average investor must pay a fee to get access to the market from a stock broker. Commissions can be as high as $50 per trade for offline, personal stock brokers, but as cheap as a few dollars for online trades. The route you choose to take depends entirely on whether the additional money for a personal stock broker is worth the extra information and trading insight you will get as a result.

Choosing a stock broker depends upon your specific needs, investment goals, and experience in the market.  Generally, the more experienced you become in the market, the lower the commissions you will pay, as you can switch to a discount stock broker.