Brokerage Trading – An Introduction To The Selection Of Your First Broker

Brokerage trading has been the classical way of trading in the stock market. The concept of brokerage trading emerged primarily because not all people, who want to do stock trading, have enough time or experience that is demanded by the stock market. The risks involved in stock trading are so high that many people who are new to the market occasionally go bankrupt. In view of this, some people who are seniors in the stock market help new entrants. They charge a certain percentage of money from the people on whose behalf they trade. This percentage they charge is known as brokerage and the process of trading is known as brokerage trading.

Today, brokerage trading is done in two ways. The first and more common way in which stock trading services are provided is known as 'full service stock brokerage'. The second way is newer, but is a more lucrative way of brokerage trading and is known as 'discount brokerage'.

Brokerage trading services provided by full service stock brokers are comprehensive asset enhancement plans, which provide full market information services such as regular stock quotes, market research, risk estimation and management, and a host of other value added service. While some of these brokerage trading-related services are sometimes available on a subscriptionbasis or on a one-time fee basis, most of the time, these services are complimentary and are available free of cost.

Discount brokers are able to provide commission discounts even up to 90%. However, these brokerage trading services work primarily as stock trading services. Value-added services related to brokerage trading, if any, are available only if you pay for them, though some discount brokerage trading services do provide stripped-down versions of value-added services such as stock quotes and market updates at a lesser frequency as compared to those from a full service broker.

The decision of choosing the brokerage trading service from a full services broker or a discount broker depends on the depth to which you want to immerse yourself in brokerage trading. If you want to become a permanent player in the stock market, it is recommended that you go for full service stock brokers, because the primary brokerage service coupled with the value-added services they provide, allow you to gain a thorough understanding of the stock market. The brokerage trading services from a discount broker, on the other hand, are recommended, if you want to enter the stock market as a tax-planning measure, or if you want to do some moderate stock trading, but do not want to trade in the stock market as a full-time income option.