A stock broker is a financial service company that help individuals, companies and institutions buy and sell stocks and other securities listed on the stock exchange. In the UK, stock brokers are regulated by the Financial Conduct Authority (FCA), which ensures that they operate in a fair, transparent, and compliant manner.
There are two main types of stock brokers in the UK: traditional brokers and online brokers.
- Traditional brokers offer more personalized service and typically charge higher fees than online brokers. They may provide investment advice and assistance with portfolio management, as well as access to research and other resources.
- Online brokers, on the other hand, offer a more streamlined, self-directed service and generally have lower fees. They often provide educational materials and tools to help clients make informed investment decisions but do not offer the same level of personalized support as traditional brokers. Sone online brokers offer free trading.
Regardless of the type of broker you are looking for, it is important to do your due diligence before you choose to open an account with one. This includes researching the broker’s fees, services, and reputation, as well as considering your own investment goals and risk tolerance.
It is also a good idea to check whether the broker is a member of the Financial Services Compensation Scheme (FSCS), which provides protection for customers in the event that the broker becomes insolvent or is unable to meet its obligations.
Discount brokers and robo-advisors
In addition to traditional stock brokers and online brokers, there are also discount brokers and robo-advisors in the UK.
- Discount brokers offer a more basic service and typically have lower fees than traditional brokers, but may not provide the same level of support and resources. They might also offer a more limited selection of financial instruments that you can trade using their service.
- Robo-advisors are automated investment platforms that use algorithms to create and manage portfolios on behalf of their clients. They generally have low fees and offer a convenient, hands-off approach to investing, but may expose the client to more risk than normal trading.
Trading with a stock broker
When working with a stock broker, it is important to understand the different types of orders that can be placed.
- A market order is an order to buy or sell a stock at the current market price.
- A limit order allows you to specify the maximum price you are willing to pay for a stock or the minimum price at which you are willing to sell your stocks.
- A stop order, also known as a stop-loss order, allows you to set a specific price at which your stock will be sold. You stock will automatically will automatically be sold if it falls below the specified prce.
It is important to be aware of the risks involved in stock trading. The stock market can be volatile, and the value of your investments may fluctuate significantly. It is important to diversify your portfolio and to never invest money that you can not afford to lose. Never invest money that you know you are going to need within 6 months.