Is it normal for brokers to ask whether I am a beginner?
"Brokers need to assess your level of competency to ensure that they don't allow you to ""bite off more than you can chew"" and find yourself in a bad situation. Some brokers ask you to rate your skills, others ask you how long you've been trading, it always varies based on broker. I use IB and they gave me a questionairre about a wide range of instruments, my skill level, time spent trading, trades per year, etc.  Many brokers will use your self-reported experience to choose what types of instruments you can trade. Some will only allow you to start with stocks and restrict access to forex, options, futures, etc. until you ask for readiness and, for some brokers, even pass a test of knowledge. Options are very commonly restricted so that you can only go long on an option when you own the underlying stock when you are a ""newbie"" and scale out from there. Many brokers adopt a four-tiered approach for options where only the most skilled traders can write naked options, as seen here. It's important to note that all of this information is self-reported and you are not legally bound to answer honestly in any way. If, for example, you are well aware of the risks of writing naked options and want to try it despite never trading one before, there is nothing stopping you from saying you've traded options for 10 years and be given the privilege by your broker. Of course, they're just looking out for your best interest, but you are by no means forced into the scheme if you do not wish to be." "In Canada, for example, they are expected or required to find out. They call it, The “Know Your Client” rule, part of which is knowing your ""Investment knowledge and experience"". They say it is, ""to ensure their advice is suitable for you"". I have always been given that kind of form to fill in, when opening an account." "Yes, this is common and in some cases may be required.  They may use it for marketing at some level, but they also use it for risk management in deciding, for example, how much margin to offer and whether to approve access to ""riskier"" products like stock options." In many places there are legal requirements to do so, essentially made to prevent brokers from selling high-risk products as if they were deposits with guaranteed safety of your funds. There also may be prohibitions on offering high-risk/high-return products to beginner customers, e.g. requiring accredited investor status claiming that yes, you really know how this works and are informed of the involved risks or you're not allowed to invest in that product.  Making untrue claims of being not a beginner may limit your options if your broker does cheat you in some manner, as it gives them a solid argument that you confirmed that you understand how their pump-and-dump scheme works and are yourself responsible for losing your money to them.
"I think it's a silly statement. If you are prepared from the start that you might lose it then you shouldn't invest. You invest to earn not to lose. Most often losses are a result of fear.  Remember you only lose when you sell lower than you bought for.  So if you have the patience you will probably regain. I ask my clients many times how much do they want to earn and they all say ""as much as possible"". Last time I checked, that's not an objective and therefore a strategy can't be built for that.  If there is  a strategy then exiting a stock is easy,  without a strategy you never know when to exit and then you are exposed to  bottomless losses. I've successfully traded for many years with large amounts of money. I made money in the FC and in the bubble, both times it wasn't because I was prepared to lose but because I had an entry and exit strategy. If you have both the idea of investing what u are prepared to lose has little value." No, if your brokers find out about this, even though it is unlikely, you will be identified as a pattern day trader. The regulations do not specify a per broker limit. Also, it's like a credit history.  Brokers are loosely obligated to inform other brokers that a client is a pattern day trader when transferring accounts. "I'm not downvoting you because I can relate, in a way, to your post and I think this is a good topic to have on this site.  We had a question a couple weeks ago where someone, like you, took some friend's money to trade with but didn't know how to give the money back or calculate the net-return.  It is not smart to take and invest other people's money when you have zero industry experience and when you do not understand the legal requirements of handling someone else's money. Within the first 12 months of my brokerage account I had returned something like 150%, I doubled my money plus a bit.  The next year was something like -20%; if I remember correctly the next year was worse, then up again for year four.  Year 1 I thought I was a genius and had figured this whole thing out, year 2 put me in my place and year 3 kicked me while I was down. You have 6 months of pretty solid returns, good for you.  I don't think that means it's time to set up shop.  Really, I think you need to sit down and think long and hard about the implications, legal and otherwise, of holding other people's money.  Running a fund is significantly different than trading your own money.   Retail investors don't, typically, have a good memory.  Great, you made me 17% last year, and 25% the year before but right now I'm down 10%, so give me my money back because I would have been better off in an savings account this year.    This is why index funds are in vogue right now.  Lots of people have had money in active funds that have trailed or matched the ""safe and passive"" index funds, so they're angry.  Retail folks get jittery the instant they lose money, no matter how much.  You need to be ready to contend with ""What have you done for me lately?"" the instant something turns negative, no matter how positive your returns have been. At your stage in the game you should get a job and continue putting your own money in to your own system and be ready to lose some of it.  I doubt there is anyone outside your immediate family who will hand a random 18 year-old kid any significant amount of money to trade their system based on 6 months of success; certainly not more than you have in there currently." "Kid, you need to start thinking in thresholds. There are several monetary thresholds that separate your class from a more well funded class. 1) You cannot use margin with less than $2000 dollars Brokers require that you have at least $2000 before they will lend to you 2) In 2010, Congress banned under 21 year olds from getting access to credit. UNLESS they get cosigned. This means that even if you have $2000, no broker will give you margin unless you have a (good) credit history already. There was a good reason for this, but its based on the assumption that everyone is stupid, not the assumption that some people are objective thinkers. 3) The brokers that will open an account for you have high commissions. The commissions are so high that it will destroy any capital gains you may make with your $1000. For the most part. 4) The pattern day trader rule. You cannot employ sophisticated risk management while being subject to the pattern day trader rule. It basically limits you from trading 3 times a day (its more complicated than that read it yourself) if you have less than $25,000 in one account. 5) Non-trade or stock related investments: Buy municipal or treasury bonds. They will give you more than a savings account would, and municipals are tax free. This isn't exactly what I would call liquid though - ie. if you wanted to access your money to invest in something else on a whim. 6) What are you studying? If its anything technical then you might get a good idea that you could risk your money on to create value. But I would stick to high growth stocks before blowing your $1000 on an idea. Thats not exactly what I would call ""access to capital"". 7) Arbitrage. Lets say you know a friend that buys the trendy collectors shoes at discount and sells them for a profit. He might do this with one $200 pair of tennis shoes, and then use the $60 profit different to go buy video games for himself. If he wanted to scale up, he couldn't because he never has more than $200 to play with. In comparison, you could do 5 pairs ($200 x 5) and immediately have a larger operation than him, making a larger profit ($60 x 5 = $300, now you have $1300 and could do it again with 6 pairs to make an even great er profit) not because you are better or worked at it, but solely because you have more capital to start with. Keep an eye out for arbitrage opportunities, usually there is a good reason they exist if you notice it: the market is too small and illiquid to scale up with, or the entire market will be saturated the next day. (Efficient Market Theory, learn about it) 8) Take everything I just taught you, and make a ""small investor newsletter"" website with subscribers. Online sites have low overhead costs." "It is indeed, mostly because the various factors you need to take into account will change depending on the company. An Australian mining co funding a new settlement or harbor has nothing in common with a small European packaging company looking to acquire a competitor, except they both need to raise money.  As far as I know, to become ""proficient"" in that field, the only way is to go through heaps of case studies, which won't be found easily outside of the financial world (sell side research, conversation with experienced buy side analysts/PMs/traders or sell side cap markets pros).   It is niche knowledge with a narrow focus and a high potential for value added, hence, not really widely shared.  The good news though is that it isn't really that complex, it just takes (lots of) work and being in the right place (internship or entry level position in a market or M&amp;A oriented bank)." "(I answered a similar question before.) Essentially, you shouldn't trust a site you find on the Internet merely because it looks professional and real.  Before signing up with any new service provider you found online, you should verify the authenticity of both the organization itself and their web site address. Even if the name displayed by a web site represents a legitimate brokerage firm, any site you happen to come across on the Internet could be an elaborate spoof of a real company, intended to capture your personal details (or worse). First, to check if a brokerage firm is in fact registered to trade securities – in the United States – you can consult FINRA's BrokerCheck online service.  This might be the first of many checks you should undertake ... after you convince yourself that FINRA is legitimate.  A meta-problem ;-) Then, if you want to know if the web site address is authentic, one way is to contact that broker offline using the contact information found from a trusted source, such as the FINRA BrokerCheck details.  Unfortunately, those details do not currently appear to contain the broker's web site URL.  (Else, that could be useful.) Another thing to look at is the site's login or sign-up page, for a valid SSL certificate that is both issued to the correct legal name of the brokerage firm as well as has been signed by a well-known certificate authority (e.g. VeriSign). For a financial services firm of any kind, you should look for and expect to see an Extended Validation Certificate.  Any other kind of certificate might only assert that the certificate was issued to the domain-name owner, and not necessarily to an organization with the registered legal name.  (Yes, anybody can register a domain with a similar name and then acquire a basic SSL certificate for that domain.) FWIW, Scottrade and ShareBuilder are both legitimate brokers (I was aware already of each, but I also just checked in the FINRA tool), and the URLs currently linked to by the question are legitimate web site addresses for each.  Also, you can see their EV certificates in action on secured pages here and here. As to whether your investments with those brokers would be ""safe"" in the event of the broker failing (e.g. goes bankrupt), you'll want to know that they are members of the Securities Investor Protection Corporation (Wikipedia).  (Of course, this kind of protection doesn't protect you if your investments simply go down in value.) But do your own due diligence – always." There is no way to find out what future will be if you have only quote from past. In other words, nobody is able to trade history successfully and nobody will be able, ever. Quote's movement is not random. Quote is not price. Because brokerage account is not actual money. Any results in past do not guarantee you anything. Brokerage accounts should only have portions of money which you are ready to loose completely. Example: Investment firms recommended buying falling Enron stocks, even when it collapsed 3 times, then - bankrupt, suddenly. What a surprise! I strongly suggest personal referral. Ask all of your friends/family/neighbors/co-workers/dog-sitter what they think of their brokers until you find someone who loves his broker. As for transferring assets, I've found it to be quite easy. It's in the new broker's best interest to get those assets, so he should be more than willing to help. &gt; we make a trade-off between time to execute and market impact.  Is your time frame any longer than intraday? I imagine you wouldn't want to carry that risk overnight if you're a broker or selling a route..  &gt; we will join the bid for some fraction of our size, and also hit the offer when it looks like the price might be moving away from us  So, say for instance you join a bid a few levels down, you aren't really get filled, you start hitting the offer and eventually you realize you're competing with someone for the shares offered, so you take out the price level and bid on all the exchanges so that you're first on the bid at that level, then repeat until someone that can match your appetite starts to fill you on the bid?  &gt; In some certain situations we will even sweep the book several levels deep to avoid tipping off market makers and having them adjust in anticipation of the rest of our order.  Right, so say you need 100k shares, there are 10k offered at 9.98, 25k offered at 9.99, and 65k at 10.00, you might just enter an intermarket sweep order of 100k @ 10 limit and hope that you can get most of the shares off before everyone can cancel?  I imagine there has to be a lot of bidding it up to attract sellers and then letting people take out your bids all day...  I have a few other questions I would appreciate your insight on. Just trying to ascertain how orders are filled when, as you put it, time is more important than market impact to the client - when they need to take a large amount of liquidity as quickly as possible and as orderly as possible.  Let me know if you'd rather I pm you about this or the additional questions, I work in the industry as well so I know privacy is paramount. No. Brokers and HFT are two different entities, mostly.   No HFT shops have prior information about a client order.  PM me if you want to discuss more in detail. Getting beyond the scope of this post. "Until you get some financial education, you will be vulnerable to people wanting your money.  Once you are educated, you will be able to live a tidy life off this-- which is exactly why this amount was awarded to you, rather than some other amount.    They gave you enough money.  This is not a lottery win.  I mean ""financial counselors"" who will want to help you with strategies to invest your money.  Every one will promise your money will grow.   The latter case describes every full-service broker, e.g. what will happen if you walk into EdwardJones.  This industry has a long tradition of charmingly selling investments which significantly underperform the market, and making their money by kickbacks (sales commissions) from those investments (which is why they significantly underperform.)   They also offer products which are unnecessarily complex meant to confuse customers and hide fees. One mark of trouble is ""early exit"" fees, which they need to recoup the sales commission they already paid out.  Unfortunately, one of those people is you.  You are treating this like a windfall, falling into old, often-repeated cliché of ""lottery-win thinking"".  ""Gosh, there's so much money there, what could go wrong?""  This always ends in disaster and destitution, on top of your other woes.  It's not a windfall.  They gave you just enough money to live on - barely. Because these lawyers and judges do this all day every day, and they know exactly how much capital will replace a lifelong salary, and if anything you got cheated a bit.  Read on.   You don't want to feel like greedy Scrooge, hoarding every penny.  I get that.  But generous spending won't fix that.  What will is financial education, and once you have real understanding and certainty about your financial situation, you will be able to both provide for yourself and be giving in a sensible manner.   This stuff isn't taught in school.  If it was, there'd be a lot more millionaires, because wealth isn't about luck, it's about intelligent management of money.  Good advisers do exist. They're hard to find.  Good advisors work only one way: for a flat rate or hourly fee.  This is called a ""Fee-only advisor"".  S/he never takes commissions.  Beware of brokers who normally work on commission but will happily take an upfront fee.  Even if they promise to hand you their commission check, they're still recommending you into the same sub-par investments because that's their training! I get the world of finance is extremely confusing and it's hard to know where to start.  Just make one leap of faith with me: You can learn this.  One place it's not confusing: University endowments.  They get windfalls just like you, and they need to manage it to support them for a very long time, just like you.  Endowments are very closely watched by the smartest people in finance -- no lottery fever here. It's agreed by all that there is one best way to invest an endowment.  And it's mandatory by law.  An endowment is a chunk of money (say, $1.2 million) that must fund a purpose (say, a math professorship or ""chair"") in perpetuity.  You're not planning to live quite that long, but when you're in your 20's, the investment strategy is the same.  The endowment is designed to generate income of some amount, on average, over the long term.  You can draw from the endowment even in ""down years"".  The rule of thumb is 4-6% is a sustainable rate that won't overtax the endowment (usually, but you have to keep an eye on it). On $1.2M, that's $48,000 to $72,000 per year.  Not half bad.  See, I told you it could work.  Read Jane Austen?  Mister Darcy, referred to as a gentleman of 10,000 pounds -- meaning his assets were many times that, but they yield income of £10,000 a year.  Same idea.  Keep in mind that you need to pay taxes. But if you plan your investments so you're holding them more than a year, you're in the much lower 0-10-15% capital gains tax bracket.  So, here's where I'd like you to go.   I would say more, but this will give you quite an education by itself.  Say you gave all your money to me.  And said ""Your nonprofit needs an executive director. Fund it. In perpetuity.""  I'd say ""Thank you"", ""you're right"", and I'd create an endowment and invest it about like this.  That is fairly close to the standard mix you'll find in most endowments, because that is what's considered ""prudent"" under endowment law (UPMIFA). I'd carry all that in a Vanguard or Fidelity account and follow Bogle's advice on limiting fees.  That said, dollar-cost-averaging is not a suicide pact, and bonds are ugly right now (for reason Suze Orman describes) and real estate seems really bubbly right now... so I'd back out of those for now.   I'd aim to draw about $60k/year out of it or 5%, and on average, in the very long term, the capital should grow. I would adjust it downward somewhat if the next few years are a hard recession, to avoid taking too much out of the capital... and resist the urge to take more out in boom years, because that is your hedge against the next recession. Over 7% is not prudent per the law (absent very reasonable reasons). UPMIFA doesn't apply to you, but I'd act as if it did.  A very reasonable reason to take more than 7% would be to shift investment into a house for living in.  I would aim for a duplex/triplex to also have income from the property, if the numbers made sense, which they often don't in California, but that's another question.  At your financial level -- never, never, never give cash to a charity.  You will get marked as a ""soft target"" and every commercial fundraiser on earth will stalk you for the rest of your life. At your level, you open a Donor Advised Fund, and let the Fund do your giving for you.  Once you've funded it (which is tax deductible) you later tell them which charities to fund when.  They screen out fake charities and protect your identity. I discuss DAFs at length here.  Now when ""charities"" harass you for an immediate handout, just tell them that's not how you support charities." "I have been in a very similar place like that before (as an intern) and got the hell out quickly.  Let me try to paint a picture.  On the 12th floor of a random NYC midtown building there will be a large office floor with long desks in several rows.  Around the outside against the windows will be maybe some empty conference rooms, random senior people you won't be allowed to talk to, and a poor, miserable compliance guy stuck in a backoffice somewhere.  Each desk will have a phone and a call sheet.  There wont be many computers anywhere - maybe one Bloomberg machine in the back.  Every single person in there is on the phone.  In fact, that will be your job.  Starting at 7:45 sharp, you will be at your desk.  At 8 oclock, you will start dialing the call sheet put on your desk.  If it is a bunch of residences, you will get angry house wives because their husbands are at work (dont ""pitch the bitch""). Next call, you will get someone that passed away 2 years ago - mark your sheet ""dead"" and cross out as you are dialing the next number.  If you manage to get someone that answers their own phone at work and listens to a pitch, you will now get the opportunity to give a grandiose pitch on why a mid market, dividend paying stock is fantastic and should be bought now.  ""Now"" as in you have to open a brokerage account on the first call for no less than a $5k trade.  You will pitch them on why they dont need to ask their wife, why you will bring them great ideas.  Ask them what is their net worth - have they ever hired a broker over the phone (qualify them) or get hung up on.  Anything short of them threatening to call the SEC and cursing you before hanging up means you will be sure to call them again (a prospect actually picking up the phone is about a 1 in 20 dial event)  People just slamming the phones on you? - Call them back for fun because you ""got disconnected"".    If you ever manage to get a client, you will be charging them enormous percentages and fees to do simple trades. But dont worry, you probably wont get a client in the first 2 months, and even if you manage to get clients it will be maybe one or two a month.  Think about the sheer volume of calls you have to make - 300 - 400 calls a day is probably a normal pace.   You will meet the most insane people.  People will go down for lunch or coffee and never return to the office.  Most of the people there you wonder how they ever passed a series 7.  There are people that fail the 7 3 times and quit.  There will be a guy that opens 10 accounts a month and actually will be talking with two phones up to his ears at once.          This is the definition of a high pressure sales job." "My answer isn't a full one, but that's because I think the answer depends on, at minimum, the country your broker is in, the type of order you place (limit, market, algo, etc.,) and the size of your order. For example, I can tell from watching live rates on regular lot limit orders I place with my UK-based broker that they hold limit orders internally until they see a crossing rate on the exchange my requested stock is trading on, then they submit a limit order to that exchange.  I only get filled from that one exchange and this happens noticeably after I see my limit price print, and my fills are always better than my limit price. Whereas with my US-based broker, I can see my regular lotsize limit order in the order book (depth of book data) prior to any fills.  I will routinely be notified of a fill before I see the limit price print.  And my fills come from any number of US exchanges (NYSE, ARCA, BATS, etc.) even for the same stock. I should point out that the ""NBBO"" rule in the US, under SEC regulation NMS, probably causes more complications in handling of market and limit orders than you're likely to find in most countries." I've noticed that most of the problems seem to occur when they assume I am a new user (the random ones you get for hitting help help) and asking a way more basic question than what I was actually asking. Lol i work at a major prop shop and it is far from retail trading. Existing relations are important and if used well will result in an increased pnl.  Also, this is why i was referring to risk adjusted pnl to take into account different firms strategies.  Honestly your company might have a different way of doing things but at every prop shop and bank ive worked for my pnl was their primary focus.  Edit: i also wouldnt take such a condescending tone if i were you. You are far from the only person on reddit working in the industry.