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Who is a broker?

In general terms, a broker is someone who buys and sells things on behalf of others. They are the middlemen between two parties. In stock market jargon, a broker is an individual or a firm that executes ‘buy’ and ‘sell’ orders for an investor for a fee or commission. Besides executive client orders, some brokers also provide additional services such as research, intelligence, investment plans, margin funding and such other value-added services.

Earlier only the wealthy investors could afford brokers to take exposure to the stock market. However, since online broking came into the picture, it triggered a boom of discount broking firms and things started changing. This allowed more investors to use the direct equity route for stock investment, as they are now able to trade at lower costs. Discount brokers only offer vanilla ‘buy’ and ‘sell’ services without any personalised advice or other benefits.

Brokers earn money by charging a fee or commission from their clients for every order they execute. Unlike in the past, many trades are now executed via electronic systems without any human intervention. Although a number of investors still prefer using a human stockbroker for professional insight that come with it.

Brokers know their market best, they have expertise not only on trading processed but also on market behaviour. They know who to talk to, what to do, and above all, how to do it well.

Some of the top brokerages in India are: Motilal Oswal, Edelweiss, Sharekhan, ICICI Direct, Zerodha, Angel Broking, HDFC Securities, IIFL, 5Paisa, Kotak Securities, among many others.

Source: Economic Times