For trading in the share market, the trader needs to have the support of a broker. Though it is much relevant to the traders who prefer offline transactions as in online transactions the trader does not need to rely on anyone except the technology. A broker is a person who is authorized by some of the broking company and allowed to have a trading terminal from where with the help of an operator he can go for the trading on behalf of his clients. The client who wants to buy or sell shares from the market needs to call the operator and get the transaction done with confirmation from the operator.
In this market, the role of a broker is important as he is the person who can help the clients in a number of ways. He can help to trade, open the limit and settle the account frequently. He also helps one to have his demat and trading accounts opened. For this, he needs the documents from the client and fills the application form with the help of which the account can be opened in a few days.
For his services rendered to the trader, he gets an income in the form of brokerage. As it is the main source of his earnings, no broker allows discount in it if he is a full-service broker. In the market, one can also find some discount brokers who offer the trading services to the client who are the same as the full-service broker, but they charge a low amount as their brokerage. This is called the trades with a discount brokerage.
Why traders prefer a discount broker?
For any trader in intraday trading, the margin of profit is much low. In some cases, one has to get out of the trades with almost no profit, no loss situation. In such a case, if the brokerage is high, one has to bear the loss which one cannot allow. Those traders who deal in bulk also look at the brokerage what they pay to the broker and as it is a huge amount they prefer to have some discount to the same. Usually, the broker with full-service do not go for it, but the discount broker goes for the same as with low brokerage also he can have a good revenue as the trader deals in bulk only. They keep the condition of minimum turnover while placing the offer which the trader needs to follow seriously.
The brokerage with the help of the discount broker can be saved to a large extent, and the same amount can be invested in the market by the trader which can help him get more turnover and hefty profit. The increased amount of transaction can also lead one to have more brokerage paid to the broker also. Hence this can help one get the turnover as well as profit increased with a little low payment of the brokerage to the broker. The only thing one needs to have is a discount broker.