Stockbrokers and Share Dealing Guide

Share Dealing is one of the oldest and conservative ways to invest and speculate on stock market. Stock Trading has more than 800 years of history and still the most common way of investing despite the creation of so many derivate products, such as Financial Spread Betting, Contract For Difference, Futures, Options, etc.

Shares - Definition

At the most basic level, stock (often referred to as shares) is ownership, or equity, in a company. Investors buy stock in the form of shares, which represent a portion of a company's assets (capital) and earnings (dividends). As a shareholder, the extent of your ownership (your stake) in a company depends on the number of shares you own in relation to the total number of shares available.

Stock Market

Participants in the stock market range from small individual stock investors to large hedge fund traders, who can be based anywhere. Their orders usually end up with a professional at a stock exchange, who executes the order.

Some exchanges are physical locations where transactions are carried out on a trading floor, by a method known as open outcry, for example, New York Stock Exchange. This type of auction is used in stock exchanges and commodity exchanges where traders may enter "verbal" bids and offers simultaneously. The other type of exchange is a virtual kind; composed of a network of computers where trades are made electronically via traders (London Stock Exchange is the perfect example).

Actual trades are based on an auction market paradigm where a potential buyer bids a specific price for a stock and a potential seller asks a specific price for the stock. (Buying or selling at market means you will accept any ask price or bid price for the stock, respectively.) When the bid and ask prices match, a sale takes place on a first come first served basis if there are multiple bidders or askers at a given price.

Stock Brokers

Stockbrokers are the people or organisations who handle customer orders to buy and sell securities, thus making them one of the most important parts of investing. Nowadays it is not enough to make good judgments about share price movements and economy in general. Even you get it right most of the time with shares it still may not be enough if you have an unreliable and expensive stock broker. Thus special care should be taken while choosing a stock broker, it important to understand broker's charges and administration fees (brokers are very notorious for hiding fees using complicated jargon), also pay attention to what other people say about your preferred broker as clients or former clients may have much to say.

At IndependentInvestor.co.uk we let you compare share dealing accounts and find out what experience other people might have had with different brokers. You can use our unique tool to compare stock brokers by their commissions and ratings, read reviews and write your own.