Business, Legal & Accounting Glossary
A discount broker is a stockbroker who sells and buys stocks with a reduced commission. Discount brokers provide the portal to electronic trading infrastructure at a fraction of the cost of a traditional broker.
A discount broker is a stockbroker offering low commission rates. The low rates offered by a discount broker are primarily achieved through automation of trading and customer service. A discount broker will often have access to alternate quotation services, allowing trades to execute without incurring exchange fees. A discount broker may also specialize in high-volume trading, reducing rates even further by offering ECN rebates to traders providing liquidity. So-called zero commission trading may be offered by a discount broker. This may be a false economy for thrifty traders; instead of making money on a commission, the discount broker makes their money by either widening the spread or selling the right to execute the order to a market maker who can widen the spread. The discount broker business is extremely competitive, and rates change on a regular basis.
Minimum Requirements – Discount brokers also score above others when it comes to the amount of documentation required to open an account. Many discount brokers claim that you can open an account and start trading in a couple of minutes.
Customer Service – When using a discount broker you will be doing all your own trading online through their platform, but from time to time you will need to get in touch with customer service:
Trading and investing tools offered:
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This glossary post was last updated: 16th April, 2020 | 0 Views.