How is Discount Stock Trading different from Normal Stock Trading?
In recent years discount stock trading has come into its own, and
everyone who does any kind of online financial trading will have come
across it. This article will show you how it is different from the
traditional stock trading that held sway until the internet made it
available to ordinary people.
Trading on the stock market, wherever you are in the world, has
changed beyond all recognition in the period since the 1970s. This has
been driven partly by the opening up of hitherto protected markets,
and partly by the revolution in computers and the emergence of the
internet.
As a result, stock brokers have had to change their ways of doing
business. Even "normal" stock trading has changed. Buying and selling
stocks and shares used to be a complex, time-consuming business, with
telephone calls being made from the investor to his stock broker, from
the stock broker to his agent at the stock exchange, and then back
down the line.
At the stock exchange the broker or his agent would agree a purchase
or sale with the appropriate person. In England this person was called
the "jobber", and there were counterparts in other stock exchanges.
Share certificates were issued, which then had to be stamped with the
stamp duty due. These were then free to be lost by the stock broker or
his client, and so on.
Well, hopefully they weren't lost very often, but I can tell you that
when they were lost there was hell to pay. Now, even with "normal"
stock trading, often there are no share certificates issued. The stock
broker often keeps the stock in his own name, so there is no need for
fresh certificates to be issued. Of course he notes in his records
which clients own which amount of stock in which company, and so this
method is usually satisfactory to both parties.
Only if the client wishes to vote at shareholders' meetings does he
have a share certificate issued to him. In other respects, this kind
of account differs from the discounted kind in that advice and
assistance from the stock broker is more readily available. It comes
with extra charges, of course, but even so there are still a large
number of stock brokers' clients, many of them corporate clients, who
prefer this kind of account.
But for the newly arisen stock market entrepreneur who knows how to
use his computer and is familiar with the internet, this level of
service, with the extra fees that it costs, is not required. He is
quite happy to have what used to be called an "execution only"
service, in that no advice on how to invest is required.
All he needs is a trading platform whereby he can make his selections,
check the prices, and purchase or sell stock. Most platforms also
include a certain level of data provision, such as charts, indicators,
and so on, to help the online client make his trading decisions,
though many investors have their own software or internet services to
help them with that.
It's come to be known as "discount stock trading", and has opened up
financial trading to ordinary people.
everyone who does any kind of online financial trading will have come
across it. This article will show you how it is different from the
traditional stock trading that held sway until the internet made it
available to ordinary people.
Trading on the stock market, wherever you are in the world, has
changed beyond all recognition in the period since the 1970s. This has
been driven partly by the opening up of hitherto protected markets,
and partly by the revolution in computers and the emergence of the
internet.
As a result, stock brokers have had to change their ways of doing
business. Even "normal" stock trading has changed. Buying and selling
stocks and shares used to be a complex, time-consuming business, with
telephone calls being made from the investor to his stock broker, from
the stock broker to his agent at the stock exchange, and then back
down the line.
At the stock exchange the broker or his agent would agree a purchase
or sale with the appropriate person. In England this person was called
the "jobber", and there were counterparts in other stock exchanges.
Share certificates were issued, which then had to be stamped with the
stamp duty due. These were then free to be lost by the stock broker or
his client, and so on.
Well, hopefully they weren't lost very often, but I can tell you that
when they were lost there was hell to pay. Now, even with "normal"
stock trading, often there are no share certificates issued. The stock
broker often keeps the stock in his own name, so there is no need for
fresh certificates to be issued. Of course he notes in his records
which clients own which amount of stock in which company, and so this
method is usually satisfactory to both parties.
Only if the client wishes to vote at shareholders' meetings does he
have a share certificate issued to him. In other respects, this kind
of account differs from the discounted kind in that advice and
assistance from the stock broker is more readily available. It comes
with extra charges, of course, but even so there are still a large
number of stock brokers' clients, many of them corporate clients, who
prefer this kind of account.
But for the newly arisen stock market entrepreneur who knows how to
use his computer and is familiar with the internet, this level of
service, with the extra fees that it costs, is not required. He is
quite happy to have what used to be called an "execution only"
service, in that no advice on how to invest is required.
All he needs is a trading platform whereby he can make his selections,
check the prices, and purchase or sell stock. Most platforms also
include a certain level of data provision, such as charts, indicators,
and so on, to help the online client make his trading decisions,
though many investors have their own software or internet services to
help them with that.
It's come to be known as "discount stock trading", and has opened up
financial trading to ordinary people.