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NEW: How Brokerage Companies Work (You NEED to See This) - YouTube
Channel: StocksToTrade
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- So one of the first
questions you're gonna ask
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is what is a brokerage
account and how do they work?
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That's what I'm gonna talk about today.
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(upbeat music)
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Hey everyone, lead trainer with
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StocksToTrade Tim Bohen here.
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Be sure to subscribe to our channel
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as well as, most
importantly, ring that bell.
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Hit that alert bell.
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We release you a couple videos a week
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and then I also go live every week.
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I want you guys in those
videos asking those questions,
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so hit that alert bell.
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So starting at the top,
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kind of the overall view,
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there's two major different
types of brokerage accounts
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and one that I really
want you to focus on.
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So let me start out with terms.
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The first is what's called
a full service brokerage.
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This is kind of like the, I
would say, old-school brokerage.
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You think back to the olden
days with movies and stuff.
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One of my favorite trading
movies is "Trading Places,"
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and if you remember,
Dan Aykroyd, he was in
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what would be called a full
service brokerage firm,
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you know, the big, oak-paneled offices and
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the fireplaces and all of
the guys doing research,
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offering trade ideas.
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Now that's old, but
these still exist today
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where you could go down to a brokerage,
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sit down with an advisor,
and talk about your goals,
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what you're looking to do,
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how much money you have to trade,
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and that's called a full
service brokerage company.
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Now they're going to charge you for that,
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obviously they have
assistants, they have staff,
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they have a guy with
a bunch of experience,
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and he's going to give you his advice.
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You're gonna pay for that,
and that's kind of different
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from what we're looking
at from day traders.
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So that's the old-school
full service brokerage firm.
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What we're looking at is what's
called a discount brokerage,
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and these kind of started
in the dot-com boom,
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especially with the
emergence of the internet.
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Kind of think back, I mean even I had
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an E*TRADE account in the late nineties.
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Now that you had a computer,
as well as the internet,
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you could actually get
direct access to the internet
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and trade your own stocks.
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Back in the day, back to
the "Trading Places" time,
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you had to call your broker and say
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"Buy this stock, sell this stock."
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Now we've got laptops,
we've got the internet.
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You can do it yourself.
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So that's where a discount
brokerage comes in.
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So now, whatever that full
service brokerage account
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was charging you, it's
way less than the 495
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or less that the discount
brokerages are charging you
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because it's all electronic.
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That's at the end of the day, whether you
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agree or agree with automation,
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you strip out the humans,
your costs go down.
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So now with your electronic trading
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and your laptop and your
internet connection,
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you can significantly lower your cost,
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which is what we want as new
traders and active traders.
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We don't want to be calling
that broker every day
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saying "Do this, do this"
and paying his salary
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because that's going to
eat up all your profits,
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well not all, but a lot of your profits.
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So look for those discount brokerages,
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we've got a bunch that we
partner with at StocksToTrade,
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all across the gamut from
higher touch to lower touch
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to unlimited low commissions,
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so check out all of
those discount brokerages
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we have listed on our webpage.
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The third type of brokerage, which again,
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maybe as day traders we
won't necessarily use
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but I want you to be aware
of is an independent broker.
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Now these are smaller
firms that are looking
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to maybe invest over longer terms,
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so they deal with a
smaller subset of equities,
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but they are still higher touch than
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that discount brokerage, but they are
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lower touch I would say than
a full service brokerage.
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Now, they can still put you into any type
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of instrument and give you that ability,
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especially with your retirement account
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or longer term account,
so it's a good tool,
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but more of a longer term type focus.
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So again, check out these
types of firms, be educated.
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I want you to know everything you can
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possibly absorb about the markets.
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Everything is changing, always modifying,
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there's always something new.
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You have to have this
thirst for knowledge.
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Understand how brokerage accounts work
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and build that knowledge
account every day.
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But, as a day trader,
as a short-term trader,
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look for those discount brokerages
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and be aware of your options,
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and always look to lower
your costs as a new trader.
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Thanks for watching our video.
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Be sure to comment below with
any trading-related question.
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expand your trading knowledge,
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