Stockbroker relationships are breaking up
As if it is not difficult enough to deal with employees siphoning off profits and market forces you cannot control, stocks are bought through a commissionhungry broker. A broker can be an individual you talk to, a telephone system, or a Web site. Nevertheless, your relationship with a broker can be troubling.
A broker makes money each time you buy or sell a stock. The broker profits from both commissions and the spread between the buy and sell price. For example, if you sell 1,000 shares of DUD for $10 each, you pay a commission ranging from $5 at a deep discount online broker to $200 at a full-service broker. The buyer of your shares pays anywhere from $10.02 a share to $10.20 a share. The difference between your selling price and the purchaser’s buying price is the spread. The broker and others pocket the spread in addition to your commissions and the purchaser’s commissions. It is in your broker’s interest for you to make as many transactions as possible.
It is not in your interest, because every transaction costs you money.