Any brokerage house can be said to be a financial institution that facilitates investors as well as traders found in the stock market to sell and purchase financial securities. With the intention of execution of any contract within the stock market basically, two parties are needed wherein the buyer is called as long position holder, and the seller is known as short position holder. In reality, any broker plays a role of an agent in between seller and purchaser and also allows them to do trade on varied financial securities. For these services, the brokerage house gets recompense by way of fees or commissions whenever the deal is completed. You find two kinds of brokers in the industry as:

I. Traditional or full–service brokers
II. Discount brokers

While choosing the broker one must look at the rates what he is going to charge as his brokerage. The brokerage is such a cost that a trader has to bear in any situation whether he makes profit or loss. In case of profit, his share is reduced to the extent of brokerage while in case of loss he has to bear the additional burden of brokerage also. Hence those who deal with a high volume in the market love to go for the discount brokers.

Traditional brokers

Regular brokers or full – service brokers or traditional brokers tend to be the oldest brokers found in the financial market. They generally do extra than just performing the role of an agent to carry out the process of trading. Their services take in thorough research based on the stock market to proffer vital advice to the players present in the stock market. Frequently such brokerage houses provide margin loans as well to some of the customers to buy investment on the basis of credit that will be regulated by some rules and regulations.

Discount brokers

Online brokers or can be called as discount brokers take from their customers relatively the lowest brokerage as compared to full – service brokers. The reason responsible for the lower commission can be stated to permit the customers to do trade by means of computerized, automated system of trading in place of using some real stock broker to aid them to carry on the process of trading.

The system that they employ to provide these lower cost facilities is that the discount brokers perform orders merely several times within a day. What they do in the first place is collect orders that get generated by a considerable number of small traders into solo block trades that get created at some particular time within a day.

Some advantages of the discount brokers

I. Any discount broker will not proffer trading or investment advice, but they facilitate the process of trading on smaller fees as compared to a full- service broker.

II. Investors or traders present in the stock market that sell and purchase financial tools via the discount brokers bank a large sum of money on deals and commissions that give them additional fund to put in trade and gain profits

Author's Bio: 

Niti Sharma is a professional writer, blogger who writes for a variety of online publications. She is also an acclaimed blogger outreach expert and content marketer. She loves writing blogs and promoting websites related to education, fashion,Business, travel, health and technology sectors.