Investment is the need in today’s life. It is very important to have multiple source of income. Because investment not only helps in making an additional source of income, it also turns out to be a helper in the crises period. Everyone should make an investment. When making an investment you should take care of the advisor with whom you’ll get in touch for making your investment.
Discount brokers are the agents that charge commission for placing the trade. They usually do not provide with any investment suggestions / advice. Discount brokers just take the buy and sell orders from customers and place there order. The question arises how a discount broker makes money? The simple answer to this is that they charge commission on every trade they place on behalf of the customer. So in this way they place thousands of trade daily and earn commission on the trade. Earlier there used to be a person who used to be a discount broker and then he used to place the trade. But with the growing investment industry it was necessary to make the best use of technology. Since discount broker is not involved in any advisory service, it is much better that if the customer places the order all by himself/ herself. The discount broker just needs to provide an interface where the user can buy and sell on his/ her own behalf. There are many online platforms built for users for providing them the best trading experience. Many brokers nowadays charge 0% brokerage from their customers. This competition is increasing day by day. There are few companies that offer zero brokerage for placing trade. Then the question arises how the brokerage firms earn nowadays?
- Derivatives trading: For normal purchase and sale of shares these brokers doesn’t charge commission but for derivatives trading they charge a slight commission. The Derivatives trading is most common among professionals. Usually there are a lot of derivatives trades that takes place in a day. So the brokers can earn a handsome amount of money.
- Intraday trading: Some of the brokers charge for intraday trade. Intraday trade means that the buying and selling takes place on the same day. Usually there is a fixed flat reasonable fee that is charged for placing intraday trade.
There are lots of advantages of a Discount broker. Some of them are:
- Interface: The interface provided by the broker to the customer is very convenient and sophisticated. It is easy t use for any layman.
- Security: With the advent of the trading applications by brokers there is a lot of safety of the transaction and funds.
- Unbiased approach: Since the role of discount brokers is just to place the trade and do not involve in any advisory services they will not tell to sell a good stock or buy a bad one. The customers himself/ herself make this decision.
Discount brokers have made investment easy and a convenient journey. Discount brokers main work is the latency. Low latency is achieved well by these discount brokers because of the new technology as the trade gets placed faster and executed timely.