In the trading business, the risk is high but the rewards are plenty. Information on stock markets and its working are easily available on the internet, yet people are very reluctant when it comes to investing in stocks. It is volatile and even experts sometimes get their predictions wrong. In a scenario like this, where information is vague and risk seems to be high, in comes the stockbroker, a person who is a mediator of sorts and who knows the ABC of stock markets and is very knowledgeable on how the markets function better than anyone else. Majority of stockbrokers are listed in exchanges like BSE, NSE, MCX, NCDEX, etc.
Depending on an individual’s stock options and the capital they have in trading, they can choose among the ones listed in exchanges. A stock broker charges something called the brokerage, which is a fee levied on the customer for executing an order and this fee can vary from broker to broker. Stock brokers sometimes give free brokerage to new clients to encourage people to invest in the stock markets, a brokerage decides the points where one can enter and exit the market. One rule that all brokers abide is, ‘buy less and sell more’ and making trades in margins ensures that the risk on the client’s side is lower and that of the broker is fairly high.
Some factors that play a fundamental role in trading are:
- Software: good and fast software helps make trades at the right price and at the right time. Good Software gives clients and brokers fast speeds to help them navigate between deals quicker.
- Customer support: a good customer support system makes sure that the client does not remain clueless and hence they are not risked by high liquidity or ups and downs in the stock market.
There are several large firms in stock broking. Among them, there are two types, Major full-service stock brokers and discount stock brokers. Discount stock brokers offer a fixed brokerage fee and at times don’t even levy a fee to help new client and investors with low capital have an easy start; the only disadvantage is that even if their rates are low, they offer zero investment advice. Some of the best discount brokers in India charge very low brokerage fees.
Here are some advantages of choosing Discount broker over a Major Full-service broker:
- Excellent Customer Service: they provide very good customer service when the markets face ups and downs.
- Best Online Trading Platform: discount brokers provide a good platform for purely trading as they don’t have extra features and just for trading.
- Higher Leverages or Intraday exposures: brokers offer intraday trading, i.e. buying and selling within the trading time, but they offer higher leverage when one needs to buy and sell on the same day.
- Mobile Applications for Stock Trading: discount brokers offer a variety of mobile platform solutions making trading easier, and accessible on the go.
Discount brokers offer a new and easy solution to clients and investors who are willing to invest in stocks, but without the disadvantages of huge brokerage fees and margins.