A stock broker or stock brokerage is an individual or a firm who performs transactions on a stock market as an agent of his/her/its clients who are unable or unwilling to trade for themselves.
Stockbrokers also sometimes or exclusively trade on their own behalf, as a principal, speculating that a share will increase or reduce in price. In such cases the term broker makes little sense and the individuals or firms trading in a principal capacity sometimes call themselves stock traders or simply traders.
When acting as an agent, the stockbroker charges the client a flat fee and/or a percentage-based commission for undertaking the trade and the price quoted the client must be the best price available in the market.
When acting as a principal, the trade could be with another market participant or one of the stockbroker's clients. When trading in a principal capacity with a client the broker is obliged to inform the client and no commission is charged.
