Like a traditional broker, an online broker executes trades for an investor in exchange for commissions. The primary difference between an online broker and a traditional broker is that the online broker provides electronic, usually internet-based access to client accounts. By taking advantage of the internet, an online broker can also deliver timely news, information, realtime quotes and charts.
An online broker may also have access to electronic quotation services that bypass the costs of dealing with the major stock exchanges. Coupled with the elimination of direct human intervention, this allows an online broker to offer commissions significantly lower than those of a traditional broker. An online broker may further reduce costs, and therefore commissions, by having minimal customer service. Such brokers may not be the ideal choice for novice investors. |
