Stock markets and equity trading
What is an equity trader?
In the world of trading; equities and stocks are interchangeable. An equity trader or broker is someone who buys and sells company stocks and shares instead of bonds (debt securities). People do this to build wealth, by selling shares at a higher price then they paid, or by earning an income from dividends. Although it’s important to note investing in shares does not guarantee a profit.
The average person cannot buy and sell stocks on their own; they require a stockbroker to execute trades on their behalf. There are two types of stockbrokers; an advisory broker who will provide investment advice to their clients. The second is a non-advisory broker, who simply executes trades according to their client’s request. For each trade or transaction, clients pay a brokerage fee inclusive of stock exchange fees, depending on the type of service they receive from the broker.
For people engaging with a non-advisory broker, there are three main considerations before executing a trade. The price you are prepared to pay for a stock, how many shares are available at the price you’re prepared to pay, and the type of order. The type of order refers to a ‘limit order’ where a price is set; and a ‘market order’ where your trade is executed at the best possible price. Limit orders allow investors to be more specified with the price they want to pay, whereas a market order is arranged by your broker. Investors could look at diversifying their portfolio so their money isn’t based on the performance of one company or sector. While a broker may assist you in your investments, ultimately the client is responsible for their profits and/or losses.