The discount stock broker is the most well-known type of broker however there are also other brokers, such as full-service brokers and even money managers.
A little over 30 years ago, there were just full-service stock brokers who provided execution of orders and investment advice at a very high cost. The first discount brokers appeared with low costs just for the execution of trades. They grew market share quickly due to the fact that buyers were making their own investing decisions, and were simply looking for low-cost execution of orders on the exchange.
The trend continued to grow with the aid of computer technology and the development of the Internet. Nowadays, online discount brokers are giant firms in a billion-dollar business. Telephone order execution became very rare. Today, self-educated traders and investors have access to highly sophisticated trading platforms through their broker stock without additional cost.
The trading platforms that are software-based have everything from immediate order execution on all US stock exchanges to live time quotes as well as news and charts. Advanced technical analysis is now available with minimal cost. Costs of transactions have dropped to the point that they’re not a major issue. The only day trader who perform often up to hundreds of trades per day need to be mindful of their costs for trading.
The full-service broker is still a viable alternative for many. In case you do not have time to read quotes or keep up with the news, then it might be beneficial to find someone who can do the job for you. This is where a full-service broker comes in. He provides personalized service and attention. He assists you with your financial planning, offers the advice you need to make on an investment, discusses the trades with you, and makes trades on your behalf. All of this for a greater cost, of course.
If you don’t want to think about which stocks to buy and the reasons, you should consider a money management service the best option. He takes all the decisions for you and informs you of what has occurred.
Discount brokers online are also divided into three distinct groups. The first is the standard discount broker, which provides low-cost order execution using an easy and straightforward to-navigate software platform. The second kind of discount broker provides additional services at the request of customers, such as calls at a cost as well as access to search data.
The third kind of discount broker online targets professionals, either institutional or private traders who require advanced order execution as well as direct access to various options for order routing and markets. They allow you to select from a variety of ways to route orders and types of orders to increase the speed of execution or the quantity.
Whichever broker you choose to work with the broker must be a an affiliate of SIPC in the event that the discount stock broker is involved in financial trouble. Your account is then covered by SIPC up to $500,000.