Share investing and share trading is a journey, and one of the first steps to becoming involved in either
share trading or share investment you will need to sign up with a stockbroker. A stockbroker is licensed by the Australian Securities exchange (ASX) and has direct access into the CHESS system to trade stocks or derivatives on your behalf. They charge you a fee (brokerage) for acting as your agent.
There are two main types of stockbroker. The main difference between them is whether they offer advice or not. The major types of brokers are:
Full service (advisory) stockbrokers
Full service brokers offer advice on buying and selling shares, make recommendations and provide research. They also offer other investments such as
Exchange Traded Options (ETO's), warrants,
futures,
bonds and compile tailored investment plans. As full service brokers offer advice and other services, you generally pay a higher brokerage fee to transact a trade.
Non-advisory stockbrokers
Non advisory brokers are 'execution only' that is; they offer no recommendations or advice regarding the appropriateness of your decision, consequently their brokerage fees tend to be lower than a full service stockbroker. This is an attractive option for investors confident in their sharemarket knowledge and trading decisions. The 2 main types of non advisory stockbroker are; A phone non-advisory stockbroker who will act on your telephone instructions to execute an order on your behalf. And Internet based non-advisory that will execute an order that you have placed over their internet site by entering it into the trading system. The lower overhead costs of this service frequently mean that the brokerage fee is lower.