Broker

A broker is a firm or individual that stands between you and the financial markets, taking your buy and sell orders and getting them executed. When you place an order to buy shares of a stock, you are almost never dealing directly with the stock exchange or with the person selling those shares. Instead, you place the order with a broker, and the broker routes it into the market on your behalf.

In practice today, "broker" usually means a brokerage firm, accessed through a trading app or platform, rather than a human being on the phone. That firm holds your account, provides the software or interface you trade through, and charges you either a commission per trade, a spread built into the price, or in some cases nothing directly because it earns money in other ways (such as selling order flow or earning interest on cash balances).

The nuance that trips people up is the difference between a broker and a dealer, and between a broker and the market itself. A pure broker just executes your order on some exchange or venue; a dealer (or "market maker") is a firm that takes the other side of your trade using its own money. Many firms do both, which is why you will see the term "broker-dealer" - a single company registered to act in either role. Your app might show you a live price and let you click "buy," but behind that click, the order could be filled by an exchange, by an internal matching system, or by a market maker, depending on how your broker routes it.

Brokers are also gatekeepers for account rules: margin limits, the number of day trades you can make, tax reporting, and access to certain order types or markets all flow through the broker you choose, so the choice of broker shapes what you can actually do as a trader.