Definition: What are Discount Brokers?
Discount brokers are stock brokers that provide online investing and trading services at a much reduced price than tradition full service brokers.
Typically, traditional brokers charge clients commissions whenever they buy or sell a security. Discount brokers on the other hand charge straight fees that are much lower than those charged by traditional brokerages.
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In general, discount brokers charge a flat rate for any trade (regardless of the volume), rather than a commission. For people who do high volume trades, this can greatly reduce the amount of money paid to the broker.
Discount Brokers – Additional Definition and Overview
Discount brokers can afford to offer these reduced fees mostly because they provide far fewer services.
Essentially, discount brokers are for individual average investors, who are looking to trade and invest their own funds.
Many discount brokers, however, do provide a number of good financial tools, research and tutorial information that allows you to be a more educated investor.
The introduction of discount brokers signified a significant shift in stock market investing. The change meant that people who did not possess a high net-worth could afford to invest in stocks
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