The discount broker is a stock-based broker who provides essential trading services at a very low rate in comparison to the full-time stockbroker. These kinds of brokers focus to provide an online-based platform to the investors so that they can buy and sell in a convenient and cost-effective manner. The discount brokers sometimes also provide the required knowledge and material which is essential in the process of trading.
All the services which have no direct link with the trading part like the advisory services, analysis of markets are not provided by these kinds of brokers. In general terms, a discount broker is a broker who enables all the order based executions for the clients but does not provide advice in all such matters. With the increasing penetration of the internet, there has been a boost to the discount brokers and they are also now being called as the online brokers.
- The beginners working with discount brokers: All the people who want to start trading in the stock market are not well equipped with the knowledge of the market. This is a thing which comes with experience. The new entrants need a lot of support in terms of market trends, speculations, stocks and many more things. This is not provided by discount brokers. They will provide generic support like the research analytics and boots but will not provide individual guidance. Hence, it will be highly difficult for the beginner to work with a discount broker in case he or she does not have knowledge of the industry.
- The intraday traders working with discount brokers: Intraday trading means buying and selling of shares on the same day. A beginner should not go into this concept because one must have proper knowledge of various tools and systems to become efficient in such trades. Discount brokers provide the advantage of having highly advanced trading platforms which can handle the volume of intraday trade very easily. A lot of discount brokers also have the required exposure and experience for the intraday trade. Hence, the discount brokers are very good for intraday traders and one must always check the intrinsic details before starting the trade with them.
- The long-term investors working with discount brokers: The long term traders are the ones who deal in high volumes. In case they take services of the full-time brokers then they have to pay a large amount as a percentage of the traded stock. Hence, the long-term investors go with the options of the discount brokers who provide different subscription-based plans. For the long-term investors, the discount brokers are the best because this will help them in saving a lot of amount in terms of brokerage charges.
The discount brokers provide the investors with the best quality trading platforms that can seamlessly facilitate the trade and can help in keeping the track of all the transactions with no human element. Hence, the concept of discount brokers has been very well explained.