What Are Discount Brokers

What Are Discount Brokers

What Are Discount Brokers?
Discount brokers can be a​ great way for some consumers to​ get into and participate in​ the stock market or​ the bond market .​
However, discount brokers are not for everyone .​
There are severe limitations that come with working with discount brokers and consumers should understand what those limitations are before they sign on with one .​
This article explores some of​ the issues that you will face when working through discount brokers.
First, it​ should be understood that there are discount brokers and there are full service brokers .​
There is​ a​ difference between the two.
Discount brokers are a​ fine choice if​ you want to​ participate in​ the stock market but do not need any advice before making your stock picks .​
Discount brokers do not offer clients any investment advice and do not walk through the process of​ investing .​
For this reason, you have to​ know what you are doing or​ working with this type of​ broker can be a​ big mistake.
If you are comfortable doing your own research and making your own buying decisions, discount brokers will act in​ your behalf and buy or​ sell stocks and conduct option trades for you .​
In other words, you tell the discount broker what you want and they will execute the order for you.
For those who are not as​ comfortable making these decisions, or​ for those who simply do not have the time to​ research various companies on their own, full-service brokers will advice you on what to​ buy, when to​ sell, and how to​ divide your investment money.
While discount brokers will not advise you, they will charge you for their services .​
Discount brokers offer various fees, depending on many factors, but often it​ is​ based on the number of​ shares that you want to​ trade .​
One good aspect about this for consumers is​ that competition for your business is​ stiff in​ this industry and you can often find very good deals among the leading brokerage firms .​
When you are researching discount brokers, make sure you ask about additional fees that may be charged for things such as​ assets transfers, IRA fees, and banking transaction fees.
Before you sign up with a​ discount broker, ask some questions.
You will want to​ know if​ there is​ a​ minimum opening deposit required .​
You will also want to​ know if​ there are any accounting fees involved with your account or​ if​ that is​ a​ free service .​
You will want to​ know if​ there are any penalties for infrequent trading .​
In addition, you may want to​ know if​ they offer any research materials or​ tools for you to​ use .​
Many companies now offer online transaction pages that are secure, you may wish to​ know if​ the broker you are interested in​ working with offers this too, and if​ there is​ a​ charge for using the tools .​
Lastly, you always want to​ check the discount broker out before sending money .​
This can help stave off disappointment and help steer you away from less than reputable brokers.
You can find a​ lot of​ information on the various big name discount brokers online .​
This is​ a​ good place to​ start when thinking of​ opening an​ account.

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