What Is A Discount Brokerage?

One of the most dynamic and exciting sectors today is the financial industry. Characterized by big money deals and shrewd investment moves, it is attractive to many who want to make a fortune. The appeal of financial centers like Wall Street is attractive to many. To take part in the buying and selling of shares and other types of securities, you need to use the services of a brokerage firm. This is a financial institution which conducts the buying and selling of securities on behalf of a buyer. It acts as the intermediary beween the buyers and the sellers.

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There are two main types of brokerage firms. These are full-service and discount brokerage firms. Full-service brokerage firms help you to make trades and also give you investment advice. However, they can be very expensive to work with. This is because many of them charge up to 2% in commissions every time you buy or sell shares. On the other hand, a discount brokerage charges you very little in commissions when you make a trade. However, they do not give any investment advice. What are the features of a discount brokerage that make it different from a full-service one? Read on to find out.

CHARACTERISTICS OF A DISCOUNT BROKERAGE

They give you full control over your trades

A discount brokerage firm only does exactly what you want it to do. They do not try to convince you to follow a specific opinion by giving you advice. They make the exact trades which you tell them to make, nothing more, nothing less. In this way, you can make your trades based on your own judgment wth no effort from them to convince you otherwise.

They save you a lot of money

Discount brokerages conduct trades for much less than full-service ones do. They do not charge high fees because they are simply making trades on your behalf, nothing more. They do not spend time giving you their opinions on the market or which trades are hot in the moment. They are simply an intermediary between you and the market. Thus, they are very affordable to work with.

They invest more of your money in the effort of making quality trades for you

When you decide to work with a discount brokerage, you can be sure that they will make high qualtiy trades for you. In 2012, NerdWallet conducted a study. They discovered that discount brokerage firms spend a larger percentage of your commissions in making trades for you than full-service brokerages do. According to the study, full-service brokerages spend only about 12% of your commission fees to make trades. The rest is used for company activities such as advertisement and public relations. On the other hand, discount brokerages spend up to 59% of your fees exclusively to make trades. This means that they are capable of making high quality trades for you.

CONCLUSION

If you are looking to maximize the profits that you make from your investment trades, a discount brokerage is the way to go. They will not complicate your trades with advice and opinions. They will allow you to make the exact trades you desire whenever and however you want.

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