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Discount brokers are stockbrokers who help
carry a wide variety of business deals. Generally, they accept
orders for stock, stock options and futures trading deals. They are
known by different names such as discount commodity brokers,
discount stockbrokers and discount real estate brokers. Compared to
full-service brokers, discount brokers buy and sell orders at a
reduced commission.
Discount brokers allow a person to
buy "no-load" mutual funds at a reduced commission. Through an
arrangement with a particular fund, free mutual funds are sometimes
offered. Discount brokers will often provide (for a small fee) a
free 1-page Standard & Poor's Stock report on the stocks you are
requesting and a 5-10-page research report. Twenty-four hour
telephone stock quotes services are also provided, allowing the
person to build trades.
There are four types of
discount brokerage firms, full-service,discount deep discount and
computer or electronic. Full-service discount brokers offer services
that are identical to a full-service broker. They own local branch
offices for personal service, newsletters, a personal account
representative and considerable literature. Discount firms carry out
the same functions as that of the full-service discount firms. The
only difference is they don't have local branches. Their commissions
are around 1/3rd the price of a full-service agent.
Deep discount brokers are stock brokers who execute only stock and
option trades. They have fixed commissions (flat fee) for any trade
of any size. Computer or electronic brokers offer services similar
to deep discount brokers. Their service is primarily aimed at
computer users who trade via the internet.
Some
discount brokers, who cannot be clearly categorized, fall between
"discount" and "deep discount." They cater to skilled, high-volume
traders with high demands for quality service.
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