Discount Brokers

The major advantage of these brokers lies in the lower commission rates. The commissions of discount brokers may be between $5-30 per trade, much lower than full service brokers who could charge $100-150 per trade.

The second advantage is that they allow you to easily trade for yourself. Because these brokers do not offer advice you will not be tempted to call the “Expert”. They could see a stock in a whole different way and only give you a bias one way or another making it harder to take your trades if you disagree with them.

The major disadvantage to these brokers however, is the do not offer advice. If you do not plan to make your own decisions you may want to pay a little extra for a full service broker.

Alternative: The Full Service Broker

The alternative is to choose one of the full service brokers. These are basically the exact opposite of traditional internet brokers who let you buy stocks for cheap.

With a full service broker you get advice, tips, and help with your financial planning by experienced experts. The downside to this, however is that you also have to pay a lot more money to use these brokers. So, there is a tradeoff.

When to Use These Brokers

Both of these types of brokers cater to different people. The full service brokers are better if you want someone to hold your hand when you are investing. Although the problem with getting investment advice from other people is you do not know how credible they really are and nobody cares about your money more then you do.

If you want to make your own buying and selling decisions however the discount brokers work much better for you. They let you do the same thing you would get from the higher end brokers only you are able to do it for a lot less money.

If you want to learn to trade stocks sometimes it is better to not be getting advice from everyone anyways. You never know who can steer you wrong and someone else may be more conservative and aggressive then you and lead you in the wrong direction because of it.