Every stock broker deals with the cost of stock brokers. Mostly, online discount brokers are most preferred. This is mainly to lower the cost. Not all are in need of investment and trade advice. Some may need only a bit of help to carry out their trade with stocks. Such stock brokers with great potential are what discount stock brokers’ target. To put it in simple words they don’t provide full service and charge less cost when compared to other brokers. And the cost is also reasonable.
Their service is nothing to do in person. They offer internet based service. That is, buy and sell shares online facility. The stock broker has a website that provides service to you. This type of service leaves your trade untouched by them. It is all you in the trade.
Here are some cost benefits of the online discount brokers that most attracts the stock investors.
When you go for online service, the first thing that you pay is the fee for account opening. This is the payment to start with. The fee for the account opening is mandatory. Also, it is a one-time payment. You don’t have to worry much about this. Mostly, high cost brokers need maintenance fee but that is not needed by the online discount brokers. They earn their money mostly via brokerage.
You also have to choose the type of the account. The reason I mention this is that the account opening fee depends on the type of the account but not always. There are two types of accounts namely, software based and browser based account. For home users software based is best and for those who move around different places browser based accounts are more suited. The costs are different. It varies from firm to firm.
The next and the most important cost is the brokerage fee. As mentioned before, this is their main stream for making money. This fee is sometimes based on a direct percentage. Otherwise they charge a fixed price. There is also a tax payment. Never forget that the different between the brokerage fee for a discount stock broker and a full service stock broker is huge. Also if the trade is an intraday trade the brokerage fee is much less. Now you know why discount stock brokers are preferred to full service stock brokers. An intraday trade is the one in which the share is bought and sold on the same day. For such type of trade online discount stock brokers for their quickness in trading and their low cost.
The low cost of online discount stock brokers is the main reason they hold their market. Their service on the other hand is absolutely reasonable and profitable. Hence, now we know why online discount stock brokers get so much of attention.
The third is the depository fee. Earlier, physically shares were held with certificates. But now the time has changed. They have begun to use demat accounts. They are more like certificates in electric form. However you will have to pay an annual fee to hold and maintain this account.
Online discount stock brokers are gaining market from full service stock brokers. It is well proven that cost stands as the main factor that online discount brokers get more audience than full service brokers. Of all the above mentioned fees brokerage fee has to be given minded much. The account opening fee is just a one tome payment and the demat account charges annually. But brokerage fee is more frequent. Make sure you have complete knowledge about it. When you are comparing different brokerage firms make sure you look at the brokerage fee more closely. Compare with the percentages and not with the fixed amount.