Online stock trading is the call of the day and historically the best way for common folk to build wealth. In this age of avid online trading, the emphasis is more on time and technology and less on phone calls with brokers. The use of computers has definitely eased out the difficulties involved in the traditional way of stock handling. While trading stocks online we no longer need to deal with regular brokers and pay high commissions while buying or selling stocks. Our investments are totally under our control with a few clicks. And as many online brokerages or discount brokerages are vying for your business attention and hence the commission levels are at fairly reasonable and are easily affordable.
Investing has a long-term perspective and involves purchasing securities wherein the stability of value and the level of return are somewhat predictable. Online investing is extremely popular today among young investors to such an extent that most brokerage firms are offering online trading to their clients. The online brokers, unlike regular stock brokers, charge lesser fees since their role has diminished and is now limited to mediating. Hence online brokers are better termed as discount brokers. However, most online brokerage firms are nowadays considering research and advice service to the clients, just like full service brokerages.
Today, the rapidly growing volume of business done by online broker or discount brokers is witnessing their growth and success story. Even many banks and savings institutions are making discounts and online brokerage service available to the depositors who are willing to buy stocks, bonds, mutual funds and other investment vehicles. Some of the major discount and online brokerage firms are the Charles Schwab, Seibert, Vanguard Brokerage Services, York Securities, Accu Trade, TDAmeritrade, E*Trade, Fidelity Brokerage, Scottrade, and Trade Monster.
Discount brokers or online brokers: the range of service
Discount or online brokers offer little more than execution of trades which is very much unlike full service brokers. However, selecting a good brokerage firm has a good and important role to play in our whole investment decision. Always try to select a broker whose firm provides the type of services that you are looking forward to. Today, discount brokerage eservices include up-to-the-minute stock price quotation. With increasing demand, some online brokerage firms also offer its clients research staff that periodically analyses market, industry and company behavior. Some clients even receive monthly bulletins about the market activities, and recommended investment list, an account statement of the transactions of the period. Those looking to diversity their portfolios should look into brokers that allow them to trade foreign stocks.
Discount brokerage fees:
Much like full service brokerage firms, the discount brokers receive commissions for executing buy and sell order for their clients. Most of the brokerage commissions are not fixed and hence negotiable. Just because there are so many discount or online brokers today, there is a greater variation in the fees charged and services offered. The method of calculating the commissions are also not the same in every discount brokerage firms. Some firms base their commission rate on the dollar value of the transaction. Some firms base the rates of commissions on the number of shares traded. And again there are some discount brokerage firms who use both the above mentioned techniques. For options trading, there is almost always a "per contract" fee, but nowadays stocks are all done on a flat-rate basis. There is a great deal of overlap in the services offered by most of the discount and online brokerage firms. The firms with higher commissions offer more services and sometimes research related services are charged extra of the client.
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