Online Brokers (discount brokers)

A discount broker is a company that charges small commissions by permitting the execution of the transactions of the clients in the market using computerised trading systems (the electronic trading platforms that many brokers currently employ) rather than using the services of an agent or human broker to place orders in the marketplace.

Today, most traditional brokers are competing strongly to attract the attention of the clients and their money by quickly shifting to this less expensive and efficient method of trading in the markets.

Currently, most Forex brokers trade as online brokers, offering their clients the possibility to trade in the Forex market from anywhere, only with an Internet connection through a trading platform.

This allows these companies to provide a service at quite low costs compared to other markets. A similar trend is being seen in other markets, such as  stocks or futures, where brokers are orienting their services towards online trading platforms.

Another way that some brokers use to reduce costs is by executing orders only a few times a day, by aggregating the orders of a large number of small investors in one or more trading blocks that are created at specific times during the day. This allows them to reduce costs in two ways:

In the case of stock market brokers—for example—since investors’ money is combined before the purchase or sale of shares, this allows the reverse to contribute relatively small amounts of money with which fractional shares of specific shares can be acquired.

This is not usually possible with a regular broker.