For a trader, the stock trading can be a good source of income if he has an accurate and right policy for trading considering the capital deployment and risk as well as other factors. The trader, therefore, needs to see that the brokerage for trading must be controlled as it can help him save a good amount on brokerage. He can re-invest the same amount in the market and earn some more profit on it.
Discount broker carries out the services of buying and selling orders at the relatively reduced commission as compared to a full-service broker. The difference between the broker and the discount broker is that the discount broker does not provide any investment advice. Earlier, discount brokers were not easily available, and only the affluent could afford it. The emergence of the internet has made the access to the discount broker easier. The discount brokers do not give personal consultations, research, advice, estate planning, and tax planning services for the customers.
Need of a Discount Broker
Discount brokers are a benefit to the clients as they provide the services at a lower rate. They provide added services such as wealth management services and that too at much lower fees. This is because they don’t spend much money on closing the deals with the high-net-worth customers. Most of the work of the discount brokers is done online.
However, investors who want professional investment opinion and advice or want to have well managed and planned finances may seek full-service brokers. Whether one should opt for a full-service broker or a discount broker depends on the trading knowledge and investing skills, needs, financial status, and goals. As the commission takes most of the trading and investment returns, most of the individuals opt for the products offered by the discount brokers.
The discount brokers are most useful for the investors and the traders who trade actively on a regular basis as lower commissions that are charged by the brokers do not exhaust too much of the profit. Investors who trade on the frequent basis do not need advice, want to carry out their trade, have a small portfolio and are happier without the intervention of a discount broker. They even can save some of the commission that is to be paid to them.
Finding a Discount Brokers
Within the securities industry, private accounts are provided to the clients by the discount brokerages. There is no interaction between the broker and the investor. If they happen to interact with the discount broker, the communication is minimal and is meant in favor of trade executions only. The services offered by the live brokers are useful for independent investors and traders. The electronic trade platforms offered by the discount brokers in India are patterned in such a manner that they appear advantageous to the active traders. The discount brokers are highly active in the field of financial services and real estate. In the real estate field, they are useful for the buying and selling of property. They also sell insurance products at a lower rate.