Discount brokers as the name suggests executes and sells orders on your behalf. They are ideally suited for an investor who is well equipped with the necessary research tools and can take decisions at their own end. However, a discount broker does not provide investment advice or perform analysis on client’s behalf, unlike a full service broker. Before the development of better technology, only the wealthy could afford a broker and get access to the stock market. Now the internet has brought an explosion of discount brokers and get access to the stock market that allow individuals with smaller capital to trade, at a smaller fee. Most discount broker’s works through online platforms so they are nearly synonymous with online brokerages.
When you know what stocks you want and your investment decisions. All you need is a convenient way to execute all things, in that case go with a discount broker. They don’t offer advice or premium services but ensure you to perform your stock transactions almost hassle free.
Discount broker, as the name implies, are cheaper to engage than full-service broker. The regular investors had two types of discount brokers, conventional discount brokers and internet discount brokers. But the two are synonymous now. Most of the conventional discount brokers today have fully featured websites, while internet discount brokers have adopted by adding more telephone and face to face services.
- Lower cost:. One of the main reasons why investors stick to a discount broker is the low rate of commission. The commissions that are offered seem to be lowest in the industry.
- Unbiased service: As they don’t offer advice, discount brokers have no vested interest in trying to sell you any particular stock.
- Access to information: Established discount brokers offer extensive learning materials at their offices or on their website. They offer online educational video tutorial for their client so client can educate and trade with them for longer time. Most full service broker does not provide this type of facilities.
- No misleading: Discount brokers do not give brokerage target or third product sales to their employees.
- Transparency: Discount broker offer hundred percent transparency in their cost-brokerage calculator, Margin calculator, charge sheet, Trade confirmation
- Paperless account opening: With the help of you document discount broker offer paperless account opening while full service broker still process the same way.
- Flat brokerage charges: Discount broker offer their client flat brokerage charges means if you buy 1 lot or 100 lot nifty they charges you flat 20* whereas full service broker charges you you as per % on volume you trade.
- No minimum brokerage: Discount brokers don’t charge minimum brokerage for their client. So if you want to buy or trade in penny stock then discount broker is the best option for you.
To sum it up eventually it boils down to the lowest margin in India when you are choosing a stock broker. There is no point of doing trade and figuring out that a substantial amount of money is given away in the form of commissions.