There is a wide variety of the types of services that are offered by stock brokerages. Some of them offer an abundance of extra services at an additional rate of commission, while others offer only the most generic services. According to the types of services offered and how all inclusive the brokerage is, the commission rate could be quite high. In other cases, where there are not many additional services offered, the commission rates could be significantly lower. These brokerages, in the world of stock brokering are known as discount brokerages.
Types of Discount Brokerages
Discount brokerages come in two basic types. The first type of discount brokerages is called a standard discounter and these typically offer a discount of up to 50% of what full services brokerages charge on commission. The second is called a deep discounter and in many cases can offer up to 90% in discounts on commission. It isnít surprising that smaller investors generally go for these types of incentives. In addition, smaller investors who have a basic knowledge of the stock market and the way it functions can benefits greatly by going with either one of these discount brokerages.
Who Benefits from Discount Brokerages?
Because the rates at discount brokerages are so low, they are often considered the best choice for smaller scale investors. In addition commodity exchanges with smaller traders also find discount brokerages to be the most ideal option for them in terms of their requirements and brokering needs. Larger investors generally like brokerages that add an array of features which are beneficial in assisting them with much more than just the basic executing of trade deals. Individuals who dabble in the stock market with low line investments often find discount brokerages convenient and adequate for their use.
Who is Better Suited for Full Services Brokerages?
Someone who is new to the stock market and has very little understanding would not be suited for a discount brokerage as many of the decisions made by traders who use these brokerages are made independently. Therefore a common knowledge of the basics of the stock market is generally required to realize success when using a discount brokerage. These individuals would almost always be better suited for working with a full service brokerage that offers more advice and tips, as well as plenty of extra tools which can assist someone in making wise trades.
Online Discount Brokerages
There are a number of discount brokerages available online and choosing one, once you know what it is you are looking for, will not be that hard. The first thing you want to note when looking for a discount broker is that many times you really do get what you pay for. This means that sometimes a few extra dollars will go along way. Conversely, there are brokerages out there which claim to be discount brokerages but when you read the fine print, you find out there is nothing discounted about them. Choosing wisely and doing your homework is a must when deciding on a broker.
Everyone who wants to trade in the stock market is going to need some sort of go between in the form of a broker in order to do so. It is not as easy as calling up NASDAQ and telling Bill or Charlie that you want to purchase X amount of stock, in X company . For this reason you will want to choose the right broker with the right qualifications and specs for what you plan on doing. If you plan on trading anything other than stock, such as forex or binary trading options, you may want to choose a broker who is able to deal with all of your trading needs.