Friday, April 25, 2014

Who earns more, Stocks traders or Brokers?

"Name of the game: Move the money from your client's pocket into your pocket."
"But if you can make client money, it's advantageous to everyone. Correct?"
"No"


Stocks Traders are the Neil Armstrong in stocks market. They always ready to take risk. Sometimes they fail, Sometimes they don't. When ever anyone ask the question about the superiority between brokers and traders they forget one important thing. The quantity of trading. It's the whole picture that describes the trade. It's what people forget. They forget that a broker is not serving only them, there are thousands of clients. A whole picture. Whole Stocks Market. A single trade will make a small amount of money for a trader but for a broker, they are like repeating the whole process again and again. For how long? As long as there are people who are willing to sell and purchase shares in share market.

Traders are confined to invest money in limited range. They have constraints that are clearly defined. But brokers are always free. They are not bounded by any rules and limitations. They make money by commissions on trade. These commissions varies between countries. While a trader is making money on single trade, at the same time, a broker is making two deals. One deal is with you and another is with other client who is whether purchasing your stocks or selling the stocks. This is where brokers make more money. Actually a lot more than expected.

So, what's generally thought is, traders are one who makes more money by trading stocks. As conclusion they might be making more money in a single trade than a stocks trader. But, when it comes to large quantity and the frequency, brokers are always making money. The are making money when the market is going up, they are making money when the market is going down. What actually is happening right now is the traders take risk while brokers take the responsibility of trade only. Brokers are free from the obligation of pure profit in the stocks they trader.

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