You can imagine a broker as the connecting link between the investor and the stock exchanges, ie those markets on which stocks, ETFs, bonds, etc. are traded. Till the last century, the broker was a middleman who was buying and selling securities in the exchanges on behalf of his clients. The broker was, therefore, an expensive and hard to reach intermediary. Nowadays, thanks to the advent of technology, the broker has become online and allows anyone, through the payment of a modest fee, to place orders on the stock exchange, at speeds previously unthinkable.

A first clear distinction must be drawn between DMA brokers (ie those that offer direct market access) and Market Makers (ie those that act as counterparty in transactions, with the order remaining internally to the broker). In a nutshell, a DMA broker sends your orders on a regulated exchange, where the other party will be another investor who wants to carry out the same transaction with the opposite sign. The Market Maker instead, through its own Dealing Desk, executes internally your orders (CFD only). In Forex, the DMA broker is replaced by the ECN broker.

We can then distinguish between the discount brokers, ie those brokers who only provide a trading platform and basic services, so as to keep costs low for the customer, and full-service brokers, ie those brokers that offer a thorough service. Think of a bank, which not only offers a platform and access to markets but also supports the client with a financial advisor, an analyst, a series of technical tools on the platform and so on. As you can guess, this second choice would be very expensive and suitable mainly for those with large assets to be managed.

The first step is to shrink the circle exclusively to regulated brokers, ie those that guarantee the highest level of security and protection possible. Rest assured that all brokers listed on BestMoneyCompare.com pass all our strict security tests. On safety, we have saved you only part of the job. Now you will have to determine which features your ideal broker should have. In this way you will have to ask yourself some critical questions, such as: am I an active or passive investor? What products and markets do I want to trade? Do I need to receive constant assistance from the broker? These are just some of the questions. You can find the complete guide on how to choose a broker here.

Trading through the broker that best suits your investor profile will not make you rich: your profitability in investing depends 90% on your skill in knowing how to invest. The choice of a good broker will, however, allow you to save a lot of money in fees, to have a solid platform that avoids sudden crashes that prevent you from operating, to be able to take advantage of trading opportunities on the main world stock exchanges, etc. A good broker will therefore allow you to amplify your earnings and reduce your losses.