1.6. What Is a Broker and Brokerage Account?
Lesson objective
Learn about the intermediary normally required to buy securities.
A broker or broker-dealer is a firm that facilitates the purchase and sale of securities. Accounts may differ in commissions, tools, products, customer service, margin rates, and operational protections.
Before opening an account, review whether the firm and its professionals are properly registered, understand the account agreement, and confirm how cash, securities, personal data, and communications are handled.
Finzati is not a broker and does not execute trades. Its role is to organize information for research. The investment decision and order are completed through the investor's chosen broker.
What the broker actually does
A broker is the operational bridge between you and the market: order routing, account records, custody-related services, and access to securities.
| Account | Beginner meaning | |---|---| | Cash | Purchases are paid with available funds | | Margin | The broker can lend against eligible securities; losses and costs can be magnified |
Cash vs. margin
A 20% decline on a fully funded $1,000 position loses $200. If borrowed money doubles the exposure, the same market move can damage your own capital much more severely, before interest and other costs.
Compare fees, security practices, tools, order types, service, and regulatory registration—not only the look of the app.
Essential terms
| Term | Practical meaning | |---|---| | Brokerage account | An account used to hold cash and securities. | | Commission | A fee charged for certain services or transactions. | | Margin account | An account that may allow borrowed money to be used for investing, increasing risk. |
In Finzati
Use Finzati for research and a broker for execution. Keep analysis and transactions clearly separated.
What you should remember
- Verify registration, costs, and account conditions.
- Avoid margin until its risks are fully understood.
Practice
Create criteria for comparing two brokers: costs, products, security, support, and ease of use.