Trading in financial markets is impossible for traders without the participation of intermediaries. This is a broker who influences not only the success of his clients' transactions, but is also responsible for the safety of the funds entrusted to him.

That's why not only professional skills are very important for a broker, but also an ideal reputation. Choosing a reliable broker is always relevant, so as there are many scammers in the market who disguise themselves as legitimate brokerage firms.

Who is a broker and what does he do?

If you decide to start trading on the stock exchange, there are two ways in front of you.

• ◉ The first is to entrust the management to a professional. This option is suitable for those who do not have the time or desire to invest on their own.
• 
  
• ◉ The second is to take matters into your own hands: create an investment plan and be responsible for the transactions made.

But you can't just go on the stock exchange and start trading - you need a broker, that is, an intermediary between the investor and the issuer whose securities you are going to buy. The broker must have a central bank license to operate on the stock market.

Types of brokers

• ◆ A stockbroker is an intermediary in the securities, currency, and futures markets.
• 
  
• ◆ Credit - connects participants in the credit market, namely banks, borrowers, real estate agencies, appraisal and insurance companies.
• 
  
• ◆ Insurance - helps clients choose insurance services on favorable terms.
• 
  
• ◆ Mortgage - specializes in servicing mortgage borrowers.
• 
  
• ◆ Forex is an intermediary in the Forex currency market.
• 
  
• ◆ Brokerage is mediation in the field of commercial real estate.

How to distinguish a reliable broker from a scammer

The first thing to do when choosing a financial intermediary is to search for information about it on the Internet. One should be especially careful if a broker imposes services using aggressive sales methods, promises "unique opportunities" that "happen once in a lifetime" or refuses to give written information about investments.

Regularly check whether it is possible to withdraw funds and follow the financial news. This will help you quickly identify signs of bankruptcy or monetary risks.

How to choose a broker

Do not forget that the funds in the brokerage account are not protected by the state, unlike bank deposits.

What to pay attention to:

• ◈ License

Make sure that the broker has a professional securities market participant's license. Make sure that the company name in the contract matches the data in the official register. Be careful if a broker offers to sign a contract with a foreign "partner" firm with a similar name, such transactions carry high risks.

If you enter into a contract with a foreign organization, be careful. In case of violation of your rights, you will need to seek justice outside the country.

• ◈ Reputation

Check out the broker's website, read customer reviews, and look for information about the company in the financial media. Pay attention to the company's operational history and possible links to financial scandals.

• ◈ Software

If you want to trade online, find out how it will be done. Is it possible to trade on the website without installing additional software? Or will you need to install a terminal? Study the device requirements, find out if the broker has a mobile app and if it is suitable for your devices. Please also specify whether the program is paid.

• ◈ Commissions

Brokers charge a commission for services - it can be a fee for each transaction or a monthly tariff. There is often a minimum commission amount per day or month. The exchange also charges a percentage for transactions - find out if it is included in the broker's fee or paid separately.

At the first stage, it is difficult to predict how often and how many operations there will be, so you need to choose a tariff based on flexibility and not just on the commission level. It is better to focus on the broker's reliability - the tariff can be changed later.

• ◈ Withdrawal of funds

Specify how long it takes to transfer money from a brokerage account to a bank account. Check if the broker can use your funds for their own purposes. If you prohibit such use, the fees may increase - it is important to clarify this in advance.

Keep in mind that, if necessary, you can always change the broker if you are no longer satisfied with the conditions or the level of service.

Rules of interaction with a stock broker

After selecting the right intermediary, a contract is signed. From this moment on, an individual gets access to all stock market instruments. This can be done both in the company's office and online. The contract also specifies tariffs for financial transactions, and you need to read them carefully.

Next, the client deposits funds into the brokerage account and can start making transactions through the website, mobile application or other platforms.͏

It is important to choose an investment strategy in advance so as not to make purchases based on emotions. To do this, you can take training courses and learn about the basics of the stock market. Many reliable brokers offer expert advice.

What should I do if a broker goes bankrupt or loses its license?

Usually, before starting the bankruptcy process, the broker's license is first taken away. Then all operations stop, and the company gets a few months to fulfill its obligations to customers.

However, there are clauses in the contracts that allow the broker to use customer funds for their needs - with the consent of the client.

The investor cannot know when and how the broker uses the funds in the client's account. The broker's duties are often only verbal in nature. If the strategy is unsuccessful or the broker's actions are unfair, the client risks losing his money.