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A broker is a person or brokerage firm that matches investors who want to buy or sell securities (such as stocks or bonds) with the other side of their transactions.
Understanding a broker
Brokers are the most common intermediaries that investors rely on to trade various assets. To trade stocks, brokers must be licensed (i.e., registered with the U.S. Securities Exchange Commission and the Financial Industry Regulatory Authority) to match people who want to buy or sell a security with the other side of the transaction. Although this is increasingly rare, some brokers generate revenue by charging a fee (also called a commission) for each transaction.
There are dozens of brokerage firms in the US. There’s Robinhood (of course), but also others such as Charles Schwab, E* Trade, and Fidelity, which differ in terms of the services they offer and the fees they charge.
Online brokers are like professional matchmakers…
They provide a fast and efficient way to do business and connect with people on the other side of a transaction. They’re registered firms (and agents) that connect investors who want to buy or sell stocks, bonds, and other securities with parties on the other side of the transaction. Some OG firms charge a commission for this service.