Invest wisely by opening a Brokerage Account

A broking firm is a financial institution which is simply called brokerage. A stock broker is a financial institution which facilitates the buying and selling of shares or other securities between a seller and a buyer. Traditionally there are two types of brokerage services provided by the broker. A full service brokerage firm conducts reports on market research to guide the customers in every aspect of investing and manage their portfolio. These traditional brokers have become a genuine source of live stock prices update and quotes.

Whereas, a discount broker is also known as an online broker and charge a marginal sum of money i.e. commission by allowing their customers trade in securities, shares, commodity etc. in sophisticated trading platforms, powered by fully computerized trading system. For the best brokerage deals a trader has to be involved in volume trading for lesser brokerage charges and higher returns.

For trading in equity and securities market you need to open a demat account where all your securities will be held electronically and the flow of transfer of securities is fast and secure. However to actually trade in shares, securities or commodity opening a brokerage account is a must.

But you need to transact on a regular basis with your broker and a trading account will prove beneficial, this sounds simple but in order for you to transact with the broker on a regular basis you must open a "brokerage account" and brokers also offer the lowest brokerage fee to their customers. This confirms, among other things, your brokerage, guidelines to work together and so on. 

Brokers may also specify that you keep a certain amount of "margin" money with them to cover for any trades that you may execute. Further the broker may let you sell shares and have the proceeds available in your brokerage account (not sent to you)- this money can then be used to buy more shares, saves the effort of first him issuing a cheque to you and then you having to give him a cheque.

Advantages of brokerage accounts

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          1)Brokerage accounts are opened by individuals who are both new and experienced traders. The new traders will be benefitted by investment tutorials provided in the brokerage accounts and the experienced traders can consult with the analytical reports to make crucial decision on their stock.

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        2) In a traditional brokerage account you will discover that the broker will manage your portfolio, prepare market research and help you with your investment decisions. Whereas, in a discount brokerage account you will only receive the basic services of executing your sale and purchase orders.

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       3) Having a brokerage account with a reputed broker will ensure that you avail the lowest brokerage on transactions. They offer the lowest brokerage provided that you trade in volume.  

·         Apart from brokerage you will have to pay for annual maintenance fee which is also very cost effective and remember to always trade in volume as marginal transactions will cost you more in brokerage.