There are different types of online discount stock brokers and also full service stock brokers. Discount brokers offer very limited services with no personal attention, usually just fast order execution at minimal costs. Don’t expect too much help or assistance from them because you pay for the execution only.
If you need advice about which stocks to buy or when to buy, then you should go with a full service broker who gives you the personal attention you need. He will discuss trading strategies with you, make investment plans and execute the trades for you. You can learn a lot from an experienced stock broker who is active in the stock market for years or decades already.
Less than 30 years ago, there have only been full service brokers. Their extraordinary fees made their services available to wealthy stock investors only. These brokers controlled the market until the first discount brokers came in.
There have always been many investors who made their own research and knew what they want to buy or sell and didn’t want to pay the high fees of the full service stock broker. The discount brokers became very popular quickly. With the upcoming computer technology and the emerging of the Internet, the online discount brokers took the market in storm.
While there have been some technical issues in the beginning where you still needed the phone quite often to call the broker, today trading via the Internet has become extremely fast, reliable and cheap. The most popular online stock brokers offer straight and easy software to execute the orders. Some brokers offer additional assistance upon request and at extra costs like assistance with the order execution by phone or access to detailed research material.
A third group of discount brokers has found a niche serving hyperactive private traders (day traders) or institutional traders. These so called “direct access brokers” offer advanced trading platforms where the trader can choose between dozens of order routing ways and order types just to save a few extra milliseconds in execution speed or to get a better price than the others. The software also provides real time quotes and charts with technical analysis at low monthly fees.
Online discount stock brokers will be here for a long time because there will always be demand for cheap brokers. Today, the Internet is full of information where investors can educate themselves. Full service brokers are only used by investors today who don’t have the time to do their own research or to follow the quotes.