Broker
An intermediary who executes buy and sell orders on your behalf. Modern brokers are typically electronic platforms.
A broker is a licensed intermediary that facilitates the purchase and sale of securities on behalf of clients. Brokers provide access to exchanges and other trading venues that retail investors cannot reach directly.
There are two main types: full-service brokers offer advice, research, and financial planning (for higher fees); discount/online brokers execute trades at low or zero commission with minimal advice (e.g. Interactive Brokers, TD Ameritrade, Schwab).
Brokers earn revenue through commissions, payment for order flow (PFOF), margin interest, and account fees. Understanding how your broker earns money helps you evaluate potential conflicts of interest.
Related Terms
Ask Price
The lowest price a seller is willing to accept right now. You buy at the ask.
BeginnerBid Price
The highest price a buyer is willing to pay for a security right now. You sell at the bid.
BeginnerExchange
An organized marketplace where buyers and sellers trade securities. NYSE and NASDAQ are the two largest US stock exchanges.
BeginnerMargin
Funds deposited as collateral to open a leveraged position. If losses erode your margin, your broker may issue a margin call.
IntermediateSpread
The gap between the bid and ask price. A tighter spread means lower transaction costs and better liquidity.
Beginner