Brokers, investors, stock exchanges, margin trading ... it is not easy for a novice to puzzle these out. A typical example of such confusion is the concept of a ‘broker’. Often, a broker is considered to be a person who trades shares, or yet more often a certain company that receives money and invests them into shares on its own behalf. NEITHER the first NOR the second is true.
Who are brokers and how do they earn their money?
A broker is a professional participant of the stock market, a company that represents its clients’ interests. It has a license and has a permission to work on one or several stock exchanges. This is a special ‘instrument’ for you to sell and purchase shares. You become a legal owner of securities and can dispose of them at your own discretion.
FFINEU Investments Limited is a European brokerage company provided with all necessary licenses (https://www.cysec.gov.cy/en-GB/entities/investment-firms/cypriot/73116/). It owns the online market of shares on Freedom24.com and the trading system Freedom24, which is a platform for all sorts of equity transactions (with shares, binds, currencies, ETF and other financial unstruments).
In the United States, brokers are also private individuals who consult their clients and represent their interests on stock exchanges. In Europe, an individual cannot be a broker. This is a company that provides access to stock exchanges. Only by hiring a broker you can trade shares.
How do brokers make money?
We have already told how individuals make money in stocks. Now of how and how much brokers earn.
Since a broker is an intermediary, he takes a commission for conducting transactions. Interest rates deffer, so we will only tell you about our own conditions. The conditions of FFinEU Investments are transparent:
- Commission amounting to EUR 0.004 to EUR 0.02 per share, depending on the preferred tariff.
- Commission for a deficit balance - 12% per annum. Marginal trading is making money off shares borrowed from a broker. This way of earning is suitable for experienced investors and traders. It is somewhat risky and requires certain skills in trading on equity prices.
- No commission for maintaining a nominal holding account. We charge a commission only for transactions. If you have just purchased shares, you do not need to pay a commission for their storage.
Thus, broker's profit depends on the amount and number of transactions. It is to our advantage that you begin successfully making money in stocks, for this will promote confidence in FFinEU Investments, your turnover, and therefore our profit.