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Trading financial products on margin carries a high risk and is not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.

Trading financial products on margin carries a high degree of risk and is not suitable for all investors. Please ensure you fully understand the risks and take appropriate care to manage your risk.

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Trading Terms

Brokerage: Definition and functions

Brokerage: Businessmen sealing a deal with a handshake over cash stacks.

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Suppose you want to understand how buying and selling financial products like stocks, cryptocurrencies, Forex, indices, and  commodities like gold and silver work. In that case, you need to know about global brokerage companies like Skilling, and how they function. A brokerage is a company that helps people buy and sell these financial products.

What is a brokerage?

A brokerage is a company that helps people buy and sell financial products like stocks, bonds, and other investment products. Think of it as a middleman between buyers and sellers in the financial market. When you want to invest your money, a brokerage provides the tools, advice, and services you need to make those transactions happen. They earn money by charging fees or commissions for their services. In short, a brokerage makes it easier for you to invest and trade in the financial market.

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Functions of a brokerage

The main functions of a brokerage are:

  1. Buying and selling: Some brokerages such as Skilling help people buy and sell stocks, bonds, and other instruments such as commodities and even cryptocurrencies. They act as the middleman to make these transactions smooth and easy.
  2. Research: Some brokerages provide research reports and market analysis to help clients make informed investment decisions.
  3. Managing accounts: They help clients open and manage brokerage accounts, where they can hold and track their investments.
  4. Facilitating trades: Brokerages ensure that trades are executed quickly and at the best possible prices.
  5. Providing tools: They offer various tools and platforms for clients to trade online, track their investments, and access financial news and data.
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Different brokerage specializations

  1. Stock brokerage: Helps people buy and sell stocks and other securities. They provide tools, advice, and services to make trading easier.
  2. Credit brokerage: Assists individuals or businesses in finding loans or credit options. They work with banks and lenders to get the best loan deals for their clients.
  3. Leasing brokerage: Helps businesses and individuals find leasing options for equipment, vehicles, or property. They negotiate lease terms and conditions on behalf of their clients.
  4. Forex brokerage: Specializes in the foreign exchange market. They help clients trade currencies, providing access to currency markets and offering advice on currency trading.
  5. Real estate brokerage: Helps people buy, sell, or rent properties. They assist in finding the right property, negotiating prices, and completing transactions.
  6. Business brokerage: Assists in buying and selling businesses. They help with valuing businesses, finding buyers or sellers, and negotiating deals.
  7. Insurance brokerage: Helps clients find and purchase insurance policies. They work with various insurance companies to get the best coverage and rates for their clients.
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What is a brokerage account?

A brokerage account is an account you open with a brokerage company to buy and sell different types of financial products like stocks, bonds, and other investments. It works a lot like a bank account, but instead of just holding your money, it allows you to invest it in various financial markets.

For example, let's look at Skilling, a reputable and award-winning brokerage company. When you open a brokerage account with Skilling, which is free to open,  you can trade different global CFD (Contract for Difference) instruments. This includes:

  • Forex: Trading different currencies, like buying euros and selling dollars (EURUSD).

  • Commodities: Investing in goods like gold, oil, or silver.

  • Cryptocurrencies: Buying and selling digital currencies like Bitcoin and Ethereum.

  • Stocks: Investing in shares of popular companies such as Tesla.

  • Indices: Trading on the performance of a group of stocks, like the SPX500.

With your Skilling brokerage account, you can access all these different markets from one place. You can deposit money into your account, choose what you want to trade, and track your investments over time. The brokerage provides the tools and platform to make trading easy and convenient.

Broker vs brokerage: Difference

A broker is a person who buys and sells investments like stocks or real estate on behalf of clients. Think of a broker as your agent or advisor for financial transactions.

A brokerage, as we've seen, is the company where brokers work. It’s like the business or firm that provides the service of buying and selling investments. The brokerage handles the administrative side, offers resources, and ensures everything runs smoothly.

In short, a broker is the individual helping you with your investments, while a brokerage is the company that employs the broker and supports the transactions.

Summary

As you've seen, brokerages can operate in different forms, including full-service, discount, and online platforms, each offering a range of features tailored to meet diverse investor needs. However, it is important to carefully evaluate the specific features, fees, and services offered by each type of brokerage to ensure that they align with your investment goals, risk tolerance, and preferences.

This article is offered for general information and does not constitute investment advice. Please be informed that currently, Skilling is only offering CFDs.

No commissions, no markups.
22/07 - 26/07
AMZN.US: 00:00 - 20:00 UTC
SANDUSD: 00:00 - 20:00 UTC
Trade now
What better way to welcome you than with a bonus?
Start trading with a $30 bonus on your first deposit.

Terms and Conditions apply
Get Bonus
Experience Skilling's award-winning platform
Try out any of Skilling’s trading platforms on the device of your choice across web, android or iOS.
Sign up