Market Secrets Your Stock Broker Keeps from You
You might already found a trustworthy stockbroker who you think is working with your interest in mind. However, these stock mavens who call themselves as your stock trading advisors also have a set of interests on their own and sadly, your interests and theirs might not always be in agreement. Here are some things you should know about your stockbroker, or any broker for that matter.
Who Runs the Market
Your broker can boast all they like about how much they know about stock trading and all, but this truth remains: the stock market is run by robots. Yes, it’s not really people or asset firms who run majority of the trades, but computerized algorithms and software. Because humans have limitations, they can’t spot short-term prices differences, but robots can.
Also, social media offers about 90 percent accuracy in predicting daily market trends at Dow Jones. If this is so, then it pays to keep checking one’s Facebook and Twitter feeds, and not entirely rely on what your broker says.
Unknown to many individual investors, online traders don’t have direct connection to the market. When you sell stocks, the trade doesn’t get instantly takes place. Your trusty stockbroker has to decide whom to sell your stocks and for how much (a slight difference from what was promised because of sudden market changes).
How to Earn More
Your broker promises you maximum profits, but this isn’t always the case. Expect to pay more than what your stocks are worth and expect to earn less than what they’re worth. Remember that you have a couple of people and institutions to pay along the way.
While your broker might urge you to sell shares when the market is rallying, always understand that profits come from buying low and selling high. This is what big bank organizations do, and this is what you should do, too.
Stocks may yield the most profits in the short-run, but never in the long-run. Research shows that a college education yields higher returns than stocks, bonds or real estate in the long-term.
Stockbrokers generally provide bias advice, inclined towards self-servitude. While this doesn’t mean you stop engaging the help of a broker, this suggests that you should be more careful when making trading decisions solely based on what your broker tells you.