Trading on exchanges or via brokerage companies?
I was wondering what relations are between brokerage companies and
exchanges? Are brokers representing investors to trade on exchanges?
For individual investors, what are some cons and pros of trading on
the exchanges directly versus indirectly via brokers?
Doesn't the former save the investors any costs/expenses paid to the
brokers?
Note that some (or all?) exchanges have their websites where I think trading can be done electronically, such as NASDAQ and BATS?
Can almost all stocks be found and traded on almost every exchange? In
other words, is it possible that a popular stock can only be found
and traded on one exchange, but not found on the other exchange? If
needed to be more specific, I am particularly interested in the U.S.
case,and for example, Apple's stock.
What are your advices for choosing exchange and choosing brokerage companies? What exchanges and brokerage companies do you recommend?
The exchanges that I have heard of are NASDAQ, NYSE, BATS, Chicago
Stock Exchange.
The brokerage companies I have heard of are TdAmeritrade, Fidelity,
Interactive Brokers, Vanguard.
When investing in my first mutual funds several years ago, I was a
customer of ThinkorSwim, which is now part of TdAmeritrade. I also
have accounts in Fidelity.
Thanks and regards!
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I was wondering what relations are between brokerage companies and exchanges? Are brokers representing investors to trade on exchanges?
Yes...but a broker may also buy and sell stocks for his own account. This is called broker-delaer firm.
For individual investors, what are some cons and pros of trading on the exchanges directly versus indirectly via brokers?
Doesn't the former save the investors any costs/expenses paid to the brokers?
Yes, but to trade directly on an exchange, you need to register with them. That costs money and only a limited number of people can register I believe.
Note that some (or all?) exchanges have their websites where I think trading can be done electronically, such as NASDAQ and BATS?
Can almost all stocks be found and traded on almost every exchange? In other words, is it possible that a popular stock can only be found and traded on one exchange, but not found on the other exchange? If needed to be more specific, I am particularly interested in the U.S. case,and for example, Apple's stock.
Yes, it is very much possible with smaller companies. Big companies are usually on multiple exchanges.
What are your advices for choosing exchange and choosing brokerage companies? What exchanges and brokerage companies do you recommend?
For brokerage companies, a beginner can go with discount broker. For sophisticated investors can opt for full service brokers. Usually your bank will have a brokerage firm. For exchanges, it depends...if you are in US, you should send to the US exchanges. IF you wish to send to other exchanges in other countries, you should check with the broker about that.
I was wondering what relations are between brokerage companies and
exchanges? Are brokers representing investors to trade on exchanges?
Yes when I place an order with my broker they send it out to the exchange.
- For individual investors, what are some cons and pros of trading on
the exchanges directly versus indirectly via brokers?
I may be mistaken(I highly doubt it), but from my understanding you cannot trade directly through an exchange as a retail investor.
BATS allows membership but it is only for
Your firm must be a registered broker-dealer, registered with a Self Regulatory Organization (SRO) and connected with a clearing firm.
Can almost all stocks be found and traded on almost every exchange?
In other words, is it possible that a popular stock can only be found
and traded on one exchange, but not found on the other exchange? If
needed to be more specific, I am particularly interested in the U.S.
case,and for example, Apple's stock.
No apple (aapl) is listed on the NASDAQ so trades go through the NASDAQ for aapl. Caterpillar Inc (CAT) is listed on the NYSE so trades go through the NYSE.
What are your advices for choosing exchange and choosing brokerage
companies? What exchanges and brokerage companies do you recommend?
The exchange you trade on is dependent on the security, if it is listed on the NYSE then you trade on the NYSE. As a regular investor you will be going through a broker. When looking to purchase a security it is more important to know about the company and less important to know what exchange it is listed on. Since there are rules a company must comply with for it to be listed on certain exchanges, it does make a difference but that is more the case when speaking about a stock listed Over the Counter(OTC) or NYSE. It is not important when asking NYSE or NASDAQ?
Selecting a broker is something that's dependent on your needs. You should ask your self, "whats important to me?", "Do I want apps(IE: iPhone, android)?" "Do I need fancy trading tools?". Generally all the brokers you listed will most likely do the trick for you.
Some review sites:
Brokerage Review
Online Broker Review 2012
Barron's 2012 Online Broker Review
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