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- The Securities and Exchange Commission (SEC) defines brokerages as fiduciaries that bring buyers and sellers together to execute trades on their behalf. Brokerages manage stock market auctions, where trades are cleared at points that the highest bidding and lowest offering prices meet.
- Brokerages are either categorized into full-service brokerages or discount firms. Full-service brokers are investment advisers that provide financial recommendations. Discount firms are self-service firms and often trade online.
- Online trading accounts are beneficial for value-conscious investors that prefer to execute their own research. As of 2010, online commissions are, approximately, ten dollars per trade.
- Online brokerage firms use information technology to provide real-time stock quotes and account balances. Monthly statements are also issued to summarize financial transactions.
- The SEC warns online investors against phishing scams, where fraudsters steal your account data to execute unauthorized trades and balance transfers. Criminals may attempt to steal your identity through deceptive emails that request personal information and spyware. Additionally, public computers should be avoided when cheking online brokerage accounts.
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