Discount brokerage or simple brokerage – Which one should you prefer?

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Discount brokerage is a term that confuses most of the retail investors. So let us discuss the term and its recent pricing scenario.

As we know trading and investing in stocks are always associated with its risk factor. There is always the need of some expert advice and the brokerage to handle the transactions. As your money is involved so you must take care of it.  The brokerage is of two types, viz., there is the simple brokerage and there is the discount brokerage.

What is a broker?

A brokerage firm or broker is a financial institution which provides the facility with regards to purchasing and selling of financial securities amidst a buyer and a seller. They aid the procedure of investors who pursue trading of stock and other securities. This is done by the agent stockbroker of the firm.

What is the discount brokerage?

A discount brokerage is a business that charges lower fees, as compared to that given by the traditional brokerage firm. The discount brokerage does not give any sort of financial advice.

What is the recent scenario of price in relation to discount brokerage?

In accordance with the recent announcement with respect to a discount brokerage, some discount brokers have announced that no fee will be charged to the client, for the delivery based transactions. Presently, they charge a maximum amount of Rs. 20 for intra-day and F & O brokerage.

Hence, there are a number of individuals who are in a dilemma to decide on the type of brokerage firm. It is advisable to utilize the following key points in order to come to a conclusion:-

Discount brokerage for whom?

  1. If you are a company, which is looking for research reports on companies and sectors in F & O, it is best to take the option of a full-service broker. However, if you are the Do- it – yourself type of investor, who do not need any advice on the matter concerning stock and trading you can easily rely on the discount brokerage.
  2. If you are a delivery based investor, you can easily go with the utilization of research reports or expert advice; it is absolutely fine for you to take the services of brokerage with a research team and advisory panel. After all, you will not be able to give time for this; hence you can always trust another strong research team for the same.
  3. If you want dedicated personnel working for you, it is again a must option for you to hire the services of the brokerage firm and not a discount brokerage. The discount brokerage will not provide you an answer and solve queries with respect to the matter, their work is limited. Hence, decide in accordance with the type of service you want.
  4. If you are a tech-savvy, then your choice should definitely be the discount brokerage. It is because these offer algorithms based trading, technical analysis and they have speedier programs along with low hardware cost. So their tools are better than the tools of the brokerage firm.

It is advisable for you to take the aid of the above pointers and decide likewise. There are pros and cons associated with each one of the two types of brokerage and hence discretion is advised.

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