Things you need to be aware about a discount broker


A perfect answer to the plaguing higher commission is a definite cause of concern. Discount brokers are a timely answer to this problem. You can compare them to a low cost airline. Their service is restricted to offering a platform for trading and services to execute the transactions. Just like a low cost airline whose prime objective is to make sure you reach the destinations safely. The rock bottom stock rates have a considerable saying towards the end. Via the internet or newspapers stock alerts are available. A point to consider is all of these charges are available at a fixed rate.

The major difference between a full time stock broker and a top discount broker in India is on the basis of commission levied. Most brokerage firms levy a minimum charge below the desired levels of stock and in case of options trading most of the firms have a flat rate of commission per stock. Whatever method of calculating profit is derived it has an enormous impact in relation to the profitability of a firm.

The major benefit of a discount broker is they offer unbiased services. As no advice is offered by them they are not going to force you to buy or sell a stock. They are not going to bother you with research calls and all trading inputs with brushing recommendations under the carpet of stocks that did not perform as per expected standards.

In the last few years the Indian financial sector has undergone a massive change for the good. Electronic trading has been a major revelation of sorts and this has brought about a level of transparency in the manner stock trading occurs. In a direct way this is also responsible for bringing down the costs. With the help of internet trading you are likely to come across stock brokers who levy a low charge of commission. In industrial parameters they are termed as discount brokers.

With a broker they levy charges because they provide you with a platform to transact. In case of traditional brokers the charges are on the higher side as they provide value addition reports in the form of research calls. Though they might claim that the reports are incorporated by a team of backend experts taking into consideration detailed financial analysis. But a careful analysis showcases that a different report emerges.

In simple terms a broker is going to make money only if the client transacts. More dealings on behalf of a client it is beneficial for a broker. The brokers have varied rates of commission which depends on the quantum of trade and the needs of the clients. In case of a high volume trader the brokerage rates are expected to be on the lower side while a low end retail client would end up paying more.

Before you are planning to open up an account with a discount broker check out whether there are hidden charges involved. Do keep a careful watch on the infrastructure of the broker.