Term: Broker

A broker is a company (or, historically, a person) that takes your buy and sell orders and gets them executed in the market. When you tap "buy" in a trading app, you're not touching the stock exchange directly — your order goes to your broker, and the broker (or a party it routes to) does the actual work of finding a counterparty and completing the trade.

In practice, "broker" today almost always means a brokerage firm: the platform or company where you opened an account, deposited money, and place your orders from. That firm holds your cash and positions, sends your orders out for execution, and gives you the account statements, tax forms, and margin (borrowed money for trading) that come with having an account.

The nuance that trips people up is that a broker is not the same as an exchange. An exchange (like the NYSE or Nasdaq) is the marketplace where trades actually match up; a broker is your entry point into that marketplace. Many modern brokers also act as "dealers" at the same time — trading against you from their own inventory rather than just passing your order along — which is why you'll often see the combined term "broker-dealer" in account paperwork.

Brokers make money in different ways: charging a commission per trade, charging fees on margin loans, or receiving payment for routing your order a certain way (a practice usually disclosed in the fine print). None of this changes what a broker fundamentally is — the intermediary between you and the market — but it does affect execution quality and cost, which matters more the more actively you trade.