INVESTING

Discount Stock Brokers - Worth The Cost?

If you are going to invest in the stock market, you must execute your orders through a stock broker. However, not all stock brokers give you the same services or charge you the same price for the commission to execute your order. You may want to consider one of the discount stock brokers to handle your trades.

Types of Discount Stock Brokers

There are basically three types of discount stock brokers; full service discount, discount, and deep discount stock brokers. Online discount stock brokers are available also but here you will not have close contact with a warm body, which most investors like.

The first type of the discounters is the "Full-Service Discount" broker. They provide almost the same types of services as the traditional full service stock brokers. However, this type of the stock broker will charge you about 50% of the normal commission rate of the traditional firms. They will provide trading advice as well as their research reports. Market newsletters are also part of the package of services. You will probably deal with the personnel at a local branch office.

The next type is the “Discount Broker”. These stock brokers provide stock market execution services for a variety of different types of trades. Basically, you tell them what you want to buy or sell and they merely place and transact the order on your behalf. This type of the discount stock brokers are designed for people that want to make all their own decisions and save money on the commission that they pay. Investors who use this type of broker do not want any kind of stock market or trading advice. Bear in mind though, they will not hold your hand or give you a shoulder to cry on if your positions go wrong. You are totally on your own with these types of stock brokers.

The third type is the "Deep Discount" brokers. They will execute your order usually for a flat rate, as opposed to a percentage of the money involved in the trade. These discount stock brokers offer absolutely no services other than the execution of your order. You will probably not be dealing with the same personal all the time, as many are nationwide with toll free numbers. Often this type of the discount stock brokers offers computer execution for online trading.

Discount stock brokers are a highly competitive group when it comes to pricing their services. Some are now moving into some of the features, market letters, and research reports, of the full service companies but without always giving you specific trading advice. Therefore, when you are looking for discount stock brokers, be sure to shop around and ask questions.

Investing In Dividend Paying Stocks