Merits and Demerits of Discount Brokers

There has been huge growth in the finance industry from the past few years. The coming together of finance and technology has eliminated the drawbacks which were being faced by the manual tasks being performed by employees. Each and every person has adapted to such changes as these are for own benefit only.

Even the role of discount brokers has also changed a lot. The main function of discount brokers India is to perform the trade at the right time and at the right price but they don’t give any suggestions for trade and they do not indulge themselves in any kind of analysis of the portfolio of the client. They are the intermediaries of the customers. There are many functions that are performed by discount brokers. These are:

  • Brokerage earning: the main source of income is the brokerage and the commission earned from the clients that they serve by providing the best of the services.
  • Providing the best trading platform: this trading platform is much better than the platform provided by the stockbrokers. There are many advanced features in such platforms.
  • Enhancing technical efficiency: this means that there is not much price gap between the transactions that take place. These ratings have a drastic influence on the selection of a particular broker.

Discount Brokers India

Merits of discount brokers are:

  • Low latency: Technical efficiency of discount brokers is far better than the stockbrokers due to fast software and low latency. This means the execution price and the price at which the trade was placed is different only by a whisker amount.
  • Reduction in costs: Many brokers don’t charge any commission for equity trades. They have started to offer 0% brokerage. This has reduced the cost of trade overall and an increase in profit margin.
  • They are unbiased: The functions and services provided by discount brokers are unbiased. The online website and portal are the same for everyone and everyone gets the same features that every other person is getting. So discount brokers are unbiased in providing their services.
  • Consumer education: There is much information that can be gathered from their website or even the magazines of the company or by checking any blogs on the company website. This helps the user in knowing the state of the economy and about the technical efficiency of the discount brokers.

There are some disadvantages as well as discount brokers. These are:

  • Hidden charges: Some of the charges 0 brokerages but at the end of the year or quarter they may charge with some hidden fees that were initially not told.
  • No guidance: There is no guidance as to how the trades must be placed or in which stocks the money should be invested. There is no management of portfolio done by discount brokers. The investor has to decide on his own and place the trade.
  • Very low services: The services provided are not up to the mark as if you have any queries or problems you need to find the number and contact them again and again.

Usually, people have the question that which is the best discount broker in India? The answer will depend on the services offered by the broker, the commission and the needs of the customers.

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