What is a Broker in trading? Beginners' guide

What is a Broker: A Beginner's Guide to Day Trading

May 7, 2021
2 years ago

Investing in stocks is difficult. But if you are going to invest in stocks, there are two ways to do it: You can do it yourself and become a day trader, or have a broker help you move your money.

What is a day trader and what is a broker? A day trader is someone who buys and sells stocks in a day, so it would be good for you to be able to predict the behaviour of the market while executing a strategy. Therefore, on many occasions, or depending on your experience, it may be better to trade with a broker who has more experience.

So... What is a broker? A broker is the intermediary that connects traders to the markets, matching buyers and sellers according to their needs. It is in this process that we want to find the best trades to maximise our profits.

It is normal for brokers to operate in partnerships but it is not necessary, so you can also find independent brokers. On the other hand, banks also act as brokers on certain occasions, advising their clients on which securities to invest in so that they can get a profitable return on the investment.

**The advantages of trading with brokers is that they facilitate trading in multiple securities in the following ways: - The broker will take care of buying and selling company shares, issues or instruments, under the objectives you have as a client. - And they can also help you keep an eye on the value of your shares, to sell them before they decline.

Although many investors think that trading through an online broker is the best option, the reality is that they may not be as secure. Buying and selling stocks can be an emotional rollercoaster, and a lot of money could be lost. Not only that, the trader has to spend too much time monitoring their portfolio and cash positions. If it's a broker that works with a lot of clients, you wouldn't know how good their decisions are regarding your trades.

Which broker to use for trading in 2021? I know what you're thinking, but there are no apps that will work magic with your money and make you a millionaire overnight. Well, there are, but first you have to be friends with some Nigerian prince.

You don't need to be an expert to start earning in the financial markets. Have you heard of Social Trading? Copy the best traders and win when they win. Join the Social Trading revolution with NAGA.

Copy Trading is about copying the trades of traders who are successful. If they buy, you buy, if they sell, you sell, just like when your friends jump off a bridge but this time with rope and the security of knowing what you are doing.

If you want to know in-depth about this trading technique, we recommend you read our article: What is Social Trading

In NAGA you also have the option to start Demo Trading with a 10.000€ (fictitious) account, which is a great tool to make trial and error tests.

How to be successful in day trading Here are some tips on how to succeed in day trading, which are useful to keep in mind if you are just starting out:

  • Dividend-paying stocks have a higher yield. This means you will pay less tax on their dividends because the company that owns them gets a tax break.
  • However, this is not always the case, so you should do some research before investing in dividend-paying stocks.
  • If you find a successful stock and want to buy more, make sure that the stock you want to buy is not diluted. This means that a company has increased the number of shares, thus reducing the gains you get from it.
  • And finally, learn to set a maximum buy price and a minimum sell price. Known as the stop loss and take profit.

Optimise your strategy Knowing your individual style can help you identify the stocks that make the most sense for you. - If you trade conservatively (meaning you will hold your investments and wait a couple of months to see if they recover) you may not make your hard-earned profits in one day. - And if you trade aggressively, it will allow you to trade more often and short shares if they fall below your target price. These strategies will let you know whether the stocks you own are in a short-term volatile situation or in a long-term uptrend.

Remember! Sticking to a single stock model can be dangerous. Every market is a world, and every market can function in mysterious ways.

And finally, There are many things that day traders can learn from experienced traders. If you are thinking of starting this great adventure, why don't you start learning with the Canal Trader Masterclass, which has 40 sessions of financial training from renowned and experienced traders, which will help you to order and structure the market wisely.

May the market be with you! Canal Trader.



Learn about Social Trading

Social Trading is a new system that gives everyone access to the world's best traders. You can follow top traders and automatically copy their trades. You make money when they make money with no trading expertise required. This is the Social Trading revolution.