With the boom of the internet we have seen many discount stock brokers come onto the scene. They offer cheap commissions and investment tools for the novice stock trader. The question that needs to be addressed is that is one better off trading through a discount broker or paying a higher commission to have their portfolio managed by an expert.



First let us discuss discount brokers. What is a discount broker? They are stockbrokers that carry out buy and sell orders at a reduced commission compared to a full-service broker, but provide no investment advice. The key there is that they provide no advice regarding your investments. Most discount brokerages such as Etrade, Tradeking and Ameritrade have numerous trading tools that can help you make educated decisions before you place a trade. Sometimes these tools can be a little difficult to use, so make sure you review the features prior to opening an account.

Most discount brokers have a trade commission fewer than ten dollars and no minimum trading balances. This alone makes it affordable for anyone to invest in the market. One must review all the fees prior to signing up as some brokerages charge an inactivity fee if you have not placed a trade in a certain amount of time. Other items you should look at are ACH capabilities. A brokerage that lets you transfer money into your account from a checking or savings account is much easier then having to mail in checks when you want to place a trade.

Each broker is different in terms of the execution of the trade. Some offer faster trades than others, so before opening an account, think about the type of trading you will do. If you are a day trader, then a fast execution is going to be very important to you, however if you are a long term investor, then a slower execution will most likely suit you. These types of things factor into the commission price, so just because a broker has a low commission might mean you are sacrificing service for a lower price.

Many brokerages offer things called a brokerage bonus or brokerage promo for people that sign up and invest a certain amount on money. The brokerage bonus can be anywhere from $25 to $200 depending on the amount of money you move to the account. One example of this is the current $50 Tradeking Promo when you open a new account. Etrade also has many promos involving bonus airline miles that come on time to time. Always check for a promo before you open an account as you can usually find something.

With the large selection of discount brokers in the industry, to find the best you need to determine what types of features you require compared to the commissions that they charge. If you don't need an expert's advice and want to try your own hand at trading then a discount broker is a great option for you.