The financial market favours professionals. They are the ones who know how to trade and can extract the maximum profit from trades.
And if a trader can be a beginner, a trainee, or an experienced one, a good broker should be highly qualified.
It allows him to perform his functions qualitatively and have many clients, which means that he can make good money through commission payments.
However, people are not born professionals. They earn this skill through long hours of theory and practice.
You have to devote a lot of time to the theory because there are many useful trading tactics, such as the trading volume indicator, which you can read about on fbs. com.
But we are going to tell you about a trader and a broker: who are they and what are the differences between them.
Who is a trader
A trader is a person who trades at the stock exchange. He is engaged in concluding deals on the purchase/sale of financial assets.
This specialist needs to independently monitor price fluctuations and use fundamental and technical analysis to make decisions.
Traders can act independently as businessmen or represent any financial organization (for example, a bank) as employees. In this case, deep knowledge of analytics and finance, specialized education, and successful work experience is required.
After all, you should go through a rigorous selection according to qualification criteria.
Who is a broker
A broker is an intermediary between the financial market and the client. On behalf of the latter, he concludes transactions in the exchange for his money and receives remuneration as a percentage of the profit.
The intermediary is a company or an individual expert with a special licence to perform professional functions in the financial market.
Brokers are responsible for all legal aspects and legitimate mechanisms of making deals. Their activities are controlled and regulated by special regulatory authorities in each country.
The client and the intermediary conclude a contract, which spells out the features of cooperation – rights, obligations, and responsibility.
The broker’s earnings are a commission and a reward from performed operations. This includes:
* fee for depository services;
* use of a terminal;
* account maintenance;
* commission payments to the stock exchange itself.
The intermediary can communicate with clients both personally and through online services, in automatic mode. The Internet simplifies the access of a wide audience to the stock markets.
Similarities and differences
Among the similarities between a trader and a broker are:
* the main type of activity in both categories is the sale and purchase of assets;
* compliance with the rules of exchange trading;
* the purpose of work is to make a profit;
* use of any trading platforms for concluding transactions;
* aspiration to improve the style of trading and learn.
In turn, the main differences are as follows:
* the trader uses his capital when the broker acts as an intermediary between the client and the trading platform;
* the trader independently places orders, while the broker is the executor of orders;
* the trader has a profit from completed transactions, while the broker receives a commission from the trader’s transactions;
* any person can become a trader, but to become a broker it is necessary to obey the strict rules and regulatory structures.
With different functions and methods of work, these two categories of participants in the trading process are closely related.