In the share market which is known for its various factors, the services of a broker are not unknown to anyone. Their role is so important that even one who does not know anything about the market also knows about the brokers and sometimes their work style as well as rates. A brokerage house constitutes a financial institution that put the investors and traders present within the stock market in the capacity to sell and purchase financial securities. For the implementation of a contract within the stock market two parties are needed buyer called long position holder and also seller known as short position holder. Mainly any broker performs the role of an intermediary amid seller and purchaser and makes easy for them to complete the trade on different financial securities. For these services, the brokerage house obtains compensation by way of fees or commissions whenever the deal is carried out. There are found two kinds of brokers in the stock market as:
1-Traditional brokers or full-service brokers
2- Discount brokers
Full-service brokers or traditional brokers can be taken to be the oldest type of brokers present within the stock market. They normally accomplish more than simply performing the role of an intermediary to complete the process of trading. Their services are well enclosed thorough research on the market trends to provide essential suggestions to the investors in the stock market. Frequently such brokerage houses as well provide margin loans additionally to some customers to buy investment on credit which shall be covered by necessary rules. Usually, they are more helpful to retail traders.
Online brokers or the discount brokers take from the customers’ relatively less than full-service brokers. The cause behind realising cheap commission is that they allow their customers to complete trade through the computerised trading system, an automated mode in place of interacting with a real broker to aid them with the process of trading.
The method they utilise to provide such cheap-cost service can be that these discount brokers India carry out orders merely a few times within a day. They, first of all, compile orders that the investors generate on a large scale into a single block trades that can be then formed at particular times with a day.
Below are given several draws of the discount brokers over full-service brokers:
- Any discount broker will never provide trading suggestions, but they make the easy process of trading for very cheap fees as opposed to a full-service broker.
- Investors and traders within the stock market who sell and purchase financial securities via the discount brokers bank an immense capital on deals plus commission that add to their capital which the investors may further utilise to perform trade and take home good earnings.
- Frequently the investors are needed to stick to the position for some extended span of time than it will be really needed only to make up for a huge Sometimes the discount brokers try to sell or buy some stock only to make a high commission.