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What is brokerage house and company?

Brokerage houses are also known as brokerage firms (companies). These are basically legal and licensed companies which have the authority to sell and purchase securities and stocks. These act as intermediaries in between the sellers and the buyers. The demands of the clients with respect to the stocks and their respective investment are carried on by the brokers employed by the brokerage houses.

The services of the brokers are conferred on the basis of commissions. Different brokerage firms have different commission types and amounts. The services which are offered by a particular firm are dependent on the concept of price per trade. For example, any brokerage firm which might be charging lesser fees would turn out to be slow in the execution of services when compared with any higher charging firm. In the same manner, the firms which charge higher have more personalized services.

Some of the other fees which are included in the commissions are as follows:

  • Closing of account
  • Transferring assets
  • Wiring money

Some of the firms also charge the fees when the accounts are inactive. They also demand the IRA custodian fees payment. Along with it, the annual service fees are also coupled. Explaining the functioning of OTC stocks, Jeffery B.Little in his book "Understanding Wall street" explained that the client needs to pay for the up and down in the market.

Several different types of investment products are provided by the brokerage firms. Some of them prefers specialization in only few products to emancipate their efficiency. The most common ones are:

  • Corporate bonds
  • Government bonds
  • Mutual funds
  • Stocks
  • Options
  • OTC bulletin stocks

There are several methods of trading available and they depend on the brokerage firms' convenience. Some of the simpler methods are telephones and internet.

The online brokers deal with online investments in both forex trading and stock exchanges. Some of the firms which have the facilities of online brokers are:

  • Schwab
  • Fidelity
  • eTrade
  • Ameritrade
  • Financial

The online sites of the brokerage firms have the following incorporations like:

  • Stock quotes
  • Trade information
  • Historical performance of different stocks
  • History of the companies
  • Financial status of different companies

The banking services are also provided by the brokerage firms. Some of the services are:

  • Cheque writing to ATM card and visas
  • Money market sweeps

The rate of interest of money market account is comparatively higher in the brokerage firms.

Apart from these services, some of the brokerage houses also provide with market research and other investment strategies.

Amine Bouchentouf, in the book "High powered investing, all in one dummies" states the given ways on which the broker should be selected:

  • Reasonable prices: each brokerage house has its own pricing criteria. Thus one should always compare the prices before selecting the right firm. The pricing is normally based on the money on account, trades done per quarter, number of shares traded etc.
  • Good service: the firms should not put you on call waiting and voice mail.
  • Their website should be informative and user friendly.
  • Account opening incentives should be provided.

But unfortunately the popularity of the forex markets has resulted into higher forex scams. Its sad to witness one's entire hard earned money gets wiped out due to the busting of the brokerage firms. So, its very important for the forex investors to be more careful and make flawless selection of the brokerage firms on the basis of authenticity and reliability so that ultimate financial freedom can be enjoyed.

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