WHY DISCOUNT BROKERS SHOULD BE PREFERRED OVER TRADITIONAL BROKERS

A brokerage agency is a financial institution that helps traders and investors associated with stock market to buy and sell their financial securities.  Two parties namely buyer (long position holder) and seller (short position holder) are required in stock market to execute any contract. The broking agencies generally works as a facilitator of trade between buyers and sellers. In return these agencies receive payments after execution of every transaction. These payments are in the form of commissions/fees. The very first requisite for trading stocks and other commodities is to have a demat account with different stock brokerage agencies. There are two kind of brokers:-

1. Traditional broker or full service brokers- ICICIDirect, Sharekhan, HDFC Securities, Reliance securities are among the best full service broker in India.
2. Discount brokers or on line brokers- ProStocks, Zerodha, RKSV, SAS online are among the best discount broker in India.

Few percentage of money can be saved on fees and handling charges associated with your demat account with any of the many discount stock brokers online. These online stock brokers can be helpful in doing your basic trade on intraday basis and also helps in saving you a huge amount of money. If you are an expert investor who don’t require the additional research tool options which are generally offered by full service stock brokers then the discount stock brokers are most suitable ones.  But if you are a new comer and is not familiar with all the problems and complex strategies of stock market investment then the service of full service stockbroker should be used. The discount stock brokers can also be a great choice for mid experienced investors. Many of the people find that discount stock broker serve a useful purpose as it provides a hassle free trading. If you are new investor then the use of discount stock broker can be very risky unless you are prepared to perform the extra work which are ought to be done by the brokers at the full service stock brokerage agencies. Zerodha is the best discount broker in India for beginner as well as also for the experts.

Benefits of discount brokers over traditional brokers:-

1. Trading recommendations are not provided by discount brokers but help in trading process at a very smaller charge as compared to traditional broker.
2. A large sum of money can be saved on transaction and commission by the buyers and sellers of the financial securities if the trade is performed through the discount brokers. These saved money can be further used to do perform a trade and earn additional profits.
3. To compensate the larger commission the investors are required to hold the position for a longer period. Very rarely certain stocks are pushed by discount brokers to earn a higher commission.
4. Education tools are also provided by some discount brokers to help investiors and traders in taking better investment decision
5. Discount brokers provides an automated trading platform thus offers a time saving approach for investors.

When it comes to selection of an appropriate broker among the discount or traditional broker, a suitable choice should be made based on the requirements. It solely depends on the traders or investors priority and needs.