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11 March, 04:26

Why is "discretionary authority" an important thing to be aware of when dealing with stock brokers

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  1. 11 March, 04:43
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    Discretionary authority allows the broker to make trades on your behalf, and could allow him/her to churn, or buy and sell shares of the same stock repeatedly in order to turn a quick profit. If the broker is paid by commission, then he/she has an incentive to increase transaction frequency regardless of what’s in your best interests. The more transactions, the more money he/she makes.
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