Stockbroking: What Does it Mean and Imply

The Internet, particularly the ability to trade in stock online has been instrumental in changing how stockbroking is carried out.

No matter how you may dislike stockbroking firms for their stiff upper lip attitude you need a stock broker of some sort to buy and sell securities regardless of the market you want to deal in. the first and foremost thing is thus to find a reputable stockbroking firm. Although stock brokers are probably hated as much as people hate lawyers, there are still many brokerages that have the interest of their clients as their first priority.

Stockbroking is the business and process of dealing in securities in a stock exchange. Going by that definition any entity that offers trading in over-the-counter products such as CFDs and forex is technically not a stockbroking firm.

Although, commonly referred to as brokers, these entities are primarily dealers and cannot be said to be involved in stocking broking activities. Both CFDs and forex are traded directly between two principals, you and the provider or dealer (the so-called broker). There is no broker and no exchange is involved in the transaction. Whatever hedging that the dealer has to do, is done by him on his own behalf in the relative exchange (in case of shares and commodities) and interbank foreign exchange market (in case of forex).

All this has been made possible by online trading. Online trading is really why it is now possible for the individual trader to trade in forex, something that was in the domain of only banks and large financial institutions. The ability to trade online is also the reason why newer derivative products such as CFDs are appearing in financial markets.