What gives an edge to discount brokers over full-service brokers


To get the maximum profit, one need to have a good and solid understanding of the trading and sometimes, a good guide is the only requirement. Choosing a good broker is not an easy task at all. There are huge numbers of brokers who provide their services. The trading process minimum requires two parties, one is seller and another one is buyer and a broker acts as a mediator. They get a commission called brokerage fees.

There are two types of brokers those are Full-Service brokers and Discount brokers. The first one full service broker is the person or firm which offers a full service. It is like appointing a person who will look after all the market information and strategies. Broker will be like manager of your trading account who will take decision according to your financial position and need. You can anytime avail its service and full explanation will be given to you.

There are many benefits of choosing a full time worker but there are many demerits too like they are expensive. Discount broker is somewhat more straightforward and to the point. A discount broker is basically the person who helps you in trading process. There will be no personal and extra interaction. So, the charges are also not so huge. As the name says, discount broker is the broker who offers their brokerage services at discount.  In addition to all the facts, here is the list of advantages of a discount broker over a full-service broker:

Lower Cost: it is the first and topmost advantage of the discount broker and it really matters a lot. When it comes to trading, minimizing the cost and maximizing the profit margin is the ultimate goal. In a long run, the saving done in the brokerage fees can make a huge difference as each and every percent counts in trading process and matters in trader’s earnings.  Smaller break-even: When the transaction cost is low, the stock has to be moved near for trading to break even. In case of loss, it gets minimized because of a discount broker.

Low exposure: discount brokers have less time of exposure and thus, they are result oriented. The risk of loss gets decreased, when the broker is not so lenient. The risk of discount broker is more as sometimes the broker itself has to exit.

 Good Trading platforms: Discount brokers are always recommended for the person who believes in himself as the broker does not involve in advice and suggestions at all. Trader has to research and should be willing to do some research to get better results. Technology helps in trading platform. One can make his own and calm decision.

Unbiased Service: A discount broker acts same for all its traders. A good broker always thinks about the profit and their profit is maximized when they make sure that their customers get the benefit. Discount brokers allow the trader to show his/her skills and ability to make some logical decisions.