With the advancement in stock trading technology, more and more investors and traders are favoring online stock trading over traditional floor trading. Online stock trading offers a lot of opportunities for the traders and investors and this is the reason, every second investor or trader is trading online. In fact, after the introduction of internet-based stock trading, more serious investors or traders are evolving and the entire stock market business has become hotter. With this remarkable growth in the number of traders, the number of online brokerage firms has also outgrown.
Let us analyze the pros and cons of online brokerage firms –
Well, the benefits of online stock trading are many, but security is the major concern. Similarly, using this firm has its own pros and cons. Just like online trading, online brokerage firms offer easy online accessibility. You can contact your online broker from any corner of the world, at almost any point of time in a day. You can place your trade orders instantly without missing any handsome opportunity. Transactions in online trading are also done in no time.
However, there are a few disadvantages of relying on an online broker company. Of course, online security and technological faults are always a continued threat. Moreover, online broker can not provide you the personal service that the traditional brokers provide to their customers. In your stock trading career, your traditional brokers are considered as your best friend, but in the case of online brokerage, you are again alone in this highly competitive and risky business. In case of online stock trading, the firms provide an online trading platform to the traders and they have to take a call on their investment decision themselves. However, a traditional broker could add his inputs and suggest you better deals for your investment decision.
Online stock trading is convenient and online broker firms do provide a complete set of online trading tools to the traders and investors. However, for a novice trader, such tools are a complete waste and only a floor broker could help him at this stage.
What are the different types broker firm? –
To understand the types of firms, we can categorize them in two types –
a)Full service brokerage firms
b)Discount service brokerage firms
A brokerage company, whether online or traditional, can provide full services or discount services to their clients. Of course, a full service broker firm offers a wide array of financial products and services to the traders and investors as compared to discount brokerage firms. A full service not only provides financial instruments like stock and bonds but also provide investment assistance to the traders and investors. Such firms generally have a big team of brokers and other financial experts, who also offer market research services to their clients.
Full service brokerage firms generally charge higher fees than the discount companies. They charge clients, commission on each trade or services used by him. Such companies provide investment assistance but charge fees in terms of commission regardless of good or bad client’s investment is performing.
On the other hand, discount service brokerage firms just offer transactions of the trade orders, placed by their clients. They do not offer research or investment assistance to the traders or investors. They just process orders placed by traders, without indulging in decision making process. Such firms, generally charge fixed fees and rates from their clients and earn profits on the volume of business they handle.
How to choose the right online brokerage firm for your trading journey –
When it comes to select the online brokerage firm, investors and traders need to be extra cautious. You must select the right firm based on the services it is offering and the fees they are charging from you. Make sure your online broker has a proper established office and is not operating his business from a virtual world. You must ensure that the online trading platform offered to you by the online broker is user-friendly and secure.
Only well reputed and experienced online brokerage firms must be approached for quality trading. Online broker must be able to process the trade orders quickly and respond to customer queries instantly. You can also check the testimonials of the online brokers posted on different online discussion forums.
To entice more traders or investors, different online brokerage firms offer different services. You must conduct some background research before hiring your online broker about the services he is offering and, whether the price charged by him is getting commensurate.