Today, the popularity of exchanges is not in doubt. However, only its members can trade directly on the exchange, which, incidentally, should be legal entities. This means that professional stock market participants are licensed for dealer or brokerage activities.
In modern society, it has become commonplace to play on the stock exchange: according to statistics, every second does it. Therefore, it is natural that trading on the exchange of an individual requires an intermediary who will execute orders. Such is a stock broker. His remuneration is served by commissions from the operations of his clients.
Buying stocks or currency through a broker is quite simple. The brokerage company concludes a service agreement with the client, which confirms the right of the client to give instructions to work on the exchange. First, the appropriate amount of money is required to purchase shares and currency. The exchange broker transfers these funds to the exchange, where a special account is opened in the name of the client to record exchange operations, as well as cash flows. After going through these steps, you can begin to buy and sell currency or securities. To do this, you just need to give an order for the corresponding transaction to the broker representative on the exchange.
Instructions for a transaction with currency or securities are submitted to the broker in various ways, for example, by telephone. The call gives you the opportunity to get additional advice on market conditions, which may change the decision of the client. The telephone conversation is recorded and in fact is the basis for checking the correct execution of the client’s order by the broker.
Another option for submitting an order is to submit it in advance by fax or in writing. The bidding process, as a rule, can be observed in stock centers that are specially equipped. There is also the opportunity to apply.
Currently, the most convenient way to apply is electronic. Online stock and currency trading only requires an Internet-connected computer. It installs a special program for the automatic collection of applications, which is provided to its client by an exchange broker. Thus, the client can observe the bidding process in real time and send applications for the execution of a transaction. The filed application for any filing option contains certain information:
- surname or personal code (it is assigned by the broker);
- name of shares or currency;
- type of transaction (buy / sell);
- quantity;
- the price.
The transaction price is indicated in two ways:
- market order - the exchange broker executes the order immediately at the best possible price at that time (immediate execution);
- limited order - the client reports the specific price of the transaction (pending order). It is set by the broker in the trading system and upon reaching this price the application will be executed.
The price of the same currency or security when trading on different exchanges may vary. This is due to significant differences in technology, the order and level of organization of the bidding process, during which prices are set in direct confrontation between supply and demand for the goods.
When applying for the services of a professional, you must first make sure that he has a valid license. If the company does not have such permission, and it subsequently goes bankrupt, it will fail to return its funds, even with the existing court decision. For such information, you can contact the depository - in special companies that have a database that contains information about market participants: about the level of education, about their places of work, and so on.