Could A Discount Stockbroker Be Good For You?
Could you save money on your trades by using a discount stockbroker?
The idea of a discount stockbroker is now very much a reality. To survive, most brokerages have to as a minimum have a low cost, execution only arm. Without this part of the business, they are missing out on a large number of trades and commissions.
Of course, to be able to offer very low prices, they have to make economies wherever possible. This means that they offer no advice at all (advice needs to be researched first and research costs money), no face to face service (telephone or internet only) and work from a call centre type of operation (less buildings to rent and heat).
As discussed on the
page, the flow of information has levelled the playing field to a great extent. This means that many more investors than ever before are able to make informed decisions to buy or sell stocks.
As the information now costs so much less than in the past, even an investor with a reatively small portfolio can justify the expense. Just one winning trade can pay for the annual subscription!
This means that the brokerage world is now dominated by clients looking for a discount stockbroker. Investors can compare costs very clearly and move from one firm to another for what would have seemed a few years ago as a minor saving on each trade.
As if all this news was not bad enough for brokers, they are expected to maintain high standards of service and ethics. The regulatory climate has, if anything, become firmer and more costly at the same time as commission levels have been falling. In short, the glory days have long passed.
But, from the perspective of a client, a private investor, there has never been such a good time to be involved. Information is more widely and freely available than ever before and the cost per transaction has never been under so much competition.
For the investor with skills, these are great times! If you enjoy the research and analysis of the stock market, then you really should find a discount stockbroker if you have not done this already.
And if you are a
stock market beginner
then being able to find the right information with ease (and at low cost) has never been easier. It has also never been cheaper to buy and sell which means that investors can get started with ever lower amounts of money.
To read more about related subjects, please follow the below links:
A Question To Ask A Stockbroker
How To Choose A Stockbroker
The three types of stockbroker service are described here:
Execution Only Stockbroker
Advisory Management Stockbroker
Discretionary Management Stockbroker