Trading in Securities

If you are like many people, you may not have the confidence andor expertise to make certain financial and investing decisions on your own.

Some people may have the money to invest but feel limited in their options. The question on how one can cash in on some of these investment vehicles in the capital markets industry persists.

The industry regulator of this sector is the Capital Markets Authority. Securities are defined as financial instruments that represent some type of financial value and can be sold or traded. Examples include but are not limited to stocks, bonds, mutual funds, and derivatives while the company or entity that issues the security is known as an issuer. The fact that securities are intangible makes their trade different from commodities or goods.

Although there are a number of players in the securities industry, I will only talk about two for now – investment aisors and brokersdealers. Investment aisors are individuals or companies that provide aice about securities to clients in return for a fee. They are required to be licensed by the industry watchdog.

A brokerdealer, on the other hand, is a person or company that is in the business of buying and selling securities on behalf of its customers (as a broker), or for its own account (as a dealer), and even both. The most basic function of a broker is to execute trades for the investor, but many brokers offer additional services like investment aice and portfolio management.

Most brokers are therefore also licensed as investment aisors. Brokers make money by charging commissions on each trade and collecting fees from investors. It is important to understand how the commissions and fees work if you do decide to use a broker’s services. They are also required to be licensed by the industry regulator.

Securities can seem very hard to understand especially for a beginning investor. Further still, since securities are traded in standard units, one can only buy units in multiples of the standard. This eliminates investors with small portfolios. However, this will not be a problem for brokers since they trade on behalf of many investors. Visit an investment aisor or broker for aice on how to start cashing in on securities.

The author works with TD Insurance, Canada

Source : The Observer

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