Online Stock Brokers: The Basic Kinds of Stock Brokers

2007-06-20 15:49:53

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Discount stock brokers are the most popular types of brokers but there are other types such as the full service brokers and money managers.

Close to thirty years back, full service stock brokers were the only kinds of brokers, providing order execution and investment guidance at highly increased costs. Afterwards the original discount brokers arrived offering reduced costs simply for implementing trade. Immediately, they received a portion of the market because a lot of investors were coming up with their own investment choices and were just searching for affordable order implementation at the stock trading.

The Dawn of Computer Software Trading

The growth of the computer technology as well as the Internet paved the way for a new trend in stock trading. Now online stock brokers are large organizations in a multi billion dollar sector. Order implementation through the phone became seldom. Investors as well as traders who educated themselves obtained highly advanced trading software from their stock brokers absolutely free.

These software trading applications provide everything from immediate order execution at all stock exchanges in the US to updated figures, updates and tables. Likewise, complicated technical analysis is currently accessible at reduced price. Amount of transaction decreased so much that it does not make a difference anymore. Day traders involved in several hundred transactions a day are the sole persons monitoring the trading costs.

The Types of Discount Brokers

Full service brokerage remains an alternative for a lot of people. If you cannot spend time monitoring the quotes and reading the news always then you might need someone to perform this for you. This becomes the job of the full service broker. He provides personalized service and focus, manages your financial strategies, offers investment tips, talks about your trading alternatives and implements trade on your behalf. Of course, all these come with a price.

If you don’t wish to find out which stock is the best to purchase and the reason behind such purchase, then your option could be a money manager. He makes all of the choices on your behalf and simply notifies you with what happened.

The online discount stock brokers can likewise be split into three groups. The first type are the traditional online stock brokers which provide affordable order implementation using a simple and user-friendly software application. The second type of online stock brokers provides extra services upon demand; this could involve ordering via phone at an additional fee or availability of research data.

The third type of online stock brokers pursues expert individual or corporate traders seeking advanced implementation of order and immediate entry to various markets and order routing methods. They provide an alternative between dozens of order routing methods and kinds of order to enhance the speed and volume of order implementation.

Notwithstanding the category of online stock broker you want to utilize, he should be registered with the SIPC just in case the online stock broker experiences some financial crisis. Then your online brokerage account is insured for a certain amount.


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