Most of you might have heard of a discount broker, but you have to be a dummy in order to not use them. A general perception is that discount brokers are hard to understand and there is no denying this fact. Ever since discount brokers have come into prominence they have changed the landscape of the financial world. Now the question is what a discount broker is.
Definition of a discount broker
The better news is that discount brokers help you to buy and sell stocks at a fraction of a cost when compared to traditional brokers. They are in a position to deliver these services as you just instruct them what to do. Even the online discount brokers India is not going to provide you with any advice. In terms of the commission that they are going to levy it can be as high as 2 %. If you are going to trade a few times in a year, you can see for yourself how expensive full-time brokers can work out to
Tips to choose a discount broker
Cost
In a variety of firms check out how much the trade cost works out to be. Just check out whether the discount brokerage firms levy charges on data. If you happen to be a large trader, the extra dollars can mount a lot. If you happen to be an investor with a small portfolio, the trading cost can occupy a very high percentage of your investment. The discount brokers are going to specify what they charge and you can compare it with the other brokers of the industry. But do not be fooled by cost as this does not seem to be the only criteria in choosing a discount broker.
Minimum
There are some discount brokers who could ask you to open an account with $ 500 and this could be even more. No point in wasting time to open an account with a discount broker if you are not aware of the minimums and if you can meet them in person.
In addition, most of the discount brokers need to have a minimum number of trades in a given year. If this is higher than the trades that you are planning to make, this discount broker could work out to be an expensive option.
People tend to forget this aspect as this might come back to haunt them later.
Support
Discount brokers work out to be cheap as they are not going to hire a huge staff enabling you to execute the trade. The process is automated and people only consider discount broker if they are able to undertake transactions online.
Still, from time to time you might have to interact with a discount broker. From my personal experience, you might have to interact with one when it is high-pressure situations. In such cases, you have to find professional help that helps to address the issues quickly.
Once you have gone on to compile the list of discount brokers calls each one of them.