What Is a Broker?
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A broker is a financial intermediary or service provider that gives market participants access to financial markets and related services. Depending on the jurisdiction and business model, a broker may route orders to exchanges, market makers, liquidity providers, or other venues.
What Does a Broker Provide?
- Trading account infrastructure
- Order execution and routing
- Market access to selected instruments
- Statements and transaction records
- Risk, margin, and account-management functions where applicable
A broker is not the market itself. The broker is part of the execution chain between our trading decision and the venue or counterparty where the transaction is handled.
Why Broker Selection Matters
Different brokers can offer different instruments, fees, spreads, execution models, trading hours, order types, margin rules, and regulatory protections. These differences can materially affect our trading.
Key Terms
Broker, intermediary, order routing, execution, trading account, margin, regulation.
Knowledge Check
- What is a broker?
- Why is a broker not the same thing as a stock exchange?
- Name two broker characteristics that can affect our trading.