The pros and pitfalls of availing services of a discount broker


A pre requisite of dealing in stocks, bonds or even commodities requires you to have an account with a stock brokerage firm. In the choice of discount brokers you can save some time and money online. For a seasoned campaigner discount brokers are a reliable choice if you are not looking for additional inputs which are provided by full time service brokers. The discount brokers execute your daily day to day trades and at the same time save a lot of money in the process.

Do consider the fact that each and every trader will not be served well by a discount broker. In most cases there is an apt choice for traders who can conduct their own research and market analysis. In case if you are new to the domain of stock market and not aware of the complex terms then better to avail services of a full time broker. After being in the market for some time it does make sense to avail services of a discount broker.

A major loophole with discount broker is for the most part you are not going to have any help when you need it. They do not encourage live to live interaction, comprehensive analysis and research reports are not provided. Most of the times they offer a flat rate of commission and no form of maintenance charges are associated with your accounts. This would be a major point of consideration you need to be aware when you are about to choose a discount broker.

Just clearly outline the pros and cons of such brokers. As compared to the quality financial experts they have less amount of experience. Lack of training or expertise would direct a person to a stock broker who offers a discounted rate. A majority of companies normally employ such discount brokers as middle men to execute trades on behalf of a middle man. A broker simply acts as an instructor and they are going to do what is provided by the client.

This does have its own benefits and pitfalls. For starters you are going to save a lot of money and at the same time access to financial tools is restricted that a stock broker provides you. The discounts brokers do not do seem to be a bad choice. For an experienced trader there is a welcome resort as they would enable them to execute transactions without any need of interference. On the other side of the market, if you are new to the market then discount broker would not work out to be the perfect choice for you. In fact the choice of a discount broker might work out to be tricky one. Here the hassles of doing all the work are bestowed at your own end.

To conclude the choice of a discount or a full time broker boils down to what you are specific needs are in the first place. Your financial goals have a say in the choice of a broker.

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