There are a lot of stock brokers available today. Depending on the services provided by stockbrokers ,they charge brokerages. Some provide advisory service to its clients while others do not.Some provide facility to purchase mutual funds and IPOs.Those who provide stock advisory and allow the purchase of mutual funds and IPOs are known as full-service brokers.
Whereas a discount broker charges a flat brokerage irrespective of the number of contracts traded in a particular segment.But they do not provide any stock advisory or recommendations.Through them, you can not purchase a mutual fund or IPOs.The advantage is that they charge minimal brokerages.
Let us know a bit of detail about each type of stock brokers:
1.Full-service brokers- They are the one who will provide you with services such as analysis of the market, which stocks to buy for a particular horizon of investment, trading recommendations ,call and trade, trading on their online platform . The only downside is that they will charge heavy brokerages .They charge a percentage of the amount traded.This type of brokers is suitable for investors as they will trade less often.
In full-service brokers, there are bank subsidiaries who provide with 3 in 1 account(savings account, Demat account, and trading account). The advantage is that the account holder can transfer the money easily from his savings account to his trading account for purchasing stocks and get back the money easily to his savings account after selling stocks. Examples are ICICI securities,HDFC securities, and Kotak securities.
Other full-service brokers provide all the above facilities except for the savings account. So you need to transfer the money first to their account. Renowned brokers in this category are ShareKhan and Angel securities.
Usually, you will be able to find offices of the full-service brokers in your place. For those who prefer to have physical interaction with the representatives, full-service brokers are for them.
For those who are starting out new in the stock market, it is preferable to open an account with the full-service brokers.Making mistakes in the stock market for a newbie is very common.The full-service brokers will be able to guide you when you are starting out new.
- Discount brokers-They provide online trading facilities with computer and mobile at least possible cost.Call and trade facility is also provided by them. This is suitable for traders as the brokerages are a real issue for them. They charge a particular amount irrespective of the number of contracts traded. As traders purchase a particular stock in large quantity, the brokerages are charged less.
Usually, it is hard to find the office of Discount brokers in your place. Though they can be accessed everywhere through an online platform. Examples are RKSV securities and Zerodha. For an opening account with them, you need to send filled up printed forms to their office. The forms are available on their website.