A simple way to protect you from the high charging brokers that have poisoned the stock market is to opt for the discount brokers. The discount broker’s main motto is to proffer an opportunity for easy trade with high benefits. This can be explained well with the help of an example of low fare airlines that just wants to take the customers to their destination safely without providing any special luxuries to the travelers. The discount brokers are comparatively cheaper than the traditional brokers because they do not offer the “extra luxuries,” i.e., the advice and guidance. The traditional brokers have introduced many ways of reaching out to the clients. They use the print media to share expert advice and charge per column. Some of them use the internet and guide their clients.
For a client who has limited knowledge of the field and needs advice on various matters, the service of the stockbrokers makes a huge difference. In such a situation the stockbroker needs to have right information with the backing of the source and can circulate the reliable information extracted from various sources by his efficient research department. There are also many companies that have special research wing for this reason only, and if the stockbroker is associated with one of these companies, it becomes easy for him to provide the information.
The difference between an advisory broker and discount broker
As the name suggests, the full-service broker provides many services to their clients as compared to the discount brokers. The transaction cost charged by the discount brokers is less in comparison to the advisory brokers, their main aim to save their stock at a low price so that it gives them a low brokerage when calculated as a percentage. However, this may affect the client’s productivity.
Pros of discount broker
- Discount brokers are impartial. They do not manipulate their clients and force them to enter into some deal. They simply provide an opportunity for their clients to carry out the trade. Hence, opting for a discount broker is a better option as the client won’t make a deal that will provide benefits for the brokers and not them.
- With the advancement in technology, the Indian stock market has witnessed a lot of change. The top 10 stock broker in India can now be reached through the electronic media. The online trading has revolutionized the Indian market and introduced transparency in the business. All the deals can be viewed and compared online. The opaqueness that contaminated the stock market has been reduced
- The discount brokers do not charge extra commission as they do not offer some fancy service. Moreover, trading with discount broker saves the clients from the unknown charges. The traditional brokers do sound inviting in the beginning, but as their terms and conditions unfold, the client realizes that they have been trapped in the never-ending spiral of commissions and fancy charges that are useless and could be avoided.
In short, whether it is the discount broker or the advisory broker the client himself must remain informed to save them from any loss.