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Discount Broker In UK – The Cheapest Way To Buy Shares

Analyst Team trader
Updated 7 Jul 2022

Perhaps you already know the type of stock you want and you are able to make your own investment decisions.


What you now need is to find a convenient way to transact your sell/buy orders. It is advisable that you seek the services of a discount broker. Discount brokers don’t offer advice or other premium services but the basics needed to execute your stock transactions. They are cheaper to work with than full-service brokers. This is because you will be getting information from third party sources, thus saving a lot of expenses that you can incur with a full-service broker. When it comes to choosing the cheapest stock broker, we will assist your strategy by covering:

  • Choosing a discount broker
  • Benefits of a discount broker
  • Starting with an online discount broker
  • How to invest online with a discount broker

Choosing a Discount Broker

When it comes to choosing discount brokers UK, there several factors that you must consider. A Discount broker is important as they offer you with the cheapest way to buy shares.  Here is a criteria that you can use when selecting a discount broker.

1. The Cost

Before you can choose a broker, you need to consider the cost of each trade from different firms. Also, check to see whether the discount broker has any charges for data. Most of the firms provide 20 minute delayed quotes for free and others provide free streaming data. For both small and large investors, cost is something that is quite important. If you are a large investor and often trade, using one or two extra dollars per trade will add up quite fast. If on the other hand, you have a small trade portfolio, the costs for trading can be take up a great part of your investment.  Each discount broker has a schedule of charges on their sites. Take time to compare their fees with those of other brokers.  Cost is an important aspect but at no point should one be fooled into thinking that it is the only criteria that matters when it comes to choosing a discount broker. If you want to find a discount brokers who offers you with the cheapest way to buy shares, cost is not enough consideration to choosing any broker. There are other things that matter too and are equally important.

2. The Set Minimums

There are some brokers who will let you to open a trading account with little amounts such as £500 while others will require even more. It is advisable that before you can proceed to open an account with a discount broker, know the set minimums and ensure that you can be in a position to meet them. It is equally important to keep in mind that the majority of discount brokers have minimum trades that you must make in a year. If the minimum trades you intend to make in a year are lower than those of the broker, then that particular discount trader might prove to be expensive for you. Unfortunately, most people tend to overlook this requirement and they end up making losses. It is therefore, important that you look deep into this requirement and be sure that your preferred discount broker is offering you with the best minimum rates otherwise it will cost you big in the end. Going by what you can afford is important as it will help you manage your money well as compared to when you do things blindly and end up incurring more loses than you actually expected.

3. Proprietary Funds

Proprietary funds and products are combined by the brokerage firm so that they can earn more fees. The performance of proprietary funds is not something that is worthwhile and can often lead to great investment losses. It is unfortunate that the majority of discount brokers offer proprietary funds. You should be wary of these funds and know that you are not being forced into them. Full service brokers are the ones that focus on selling the proprietary funds, thus a reason they are not the best to work with. When it comes to proprietary funds, you should keep in mind that discount brokers don’t provide any type of advice so they shouldn’t be selling you proprietary funds. You should be aware of this and make sure that nobody including your discount broker is trying to sell you these funds.  Ensure that you know your discount broker well before opening an account with them. If you feel like they are forcing you into buying these funds, just shop for a broker elsewhere. Examples of proprietary funds are the internal service funds and the enterprise fund.  The enterprise funds offer the general public with goods and services for a charge while the internal service funds are the goods and services offered by one department or agency on a basis of cost-reimbursement.

4. Support

The main reason for the success of many discount traders is the fact that they don’t hire large staff to handle client’s trade orders. The process is automated. As such it is important that you consider working with a discount broker if you are comfortable with online business transactions. Even with the online transactions, and the automated process, you will need to communicate with a human from time to time when you are in high stress situations. In such a situation, you will need the help of a professional to help you solve whatever problems you have quickly. When you are done with listing down some names of the most prospective brokers, call each one of them. See how long it takes before each of them answers your call. Come up with a list of few questions and see how good they are at answering them. Good service can be worth quite a bit when it comes to trading time.  Don’t be too stingy on your money that you make foolish decisions and ignore this important aspect when picking your discount broker.  This may seem like a small thing but in the end it can cost you a lot. It is best to be sure about the support you get now and speculate about future support when you will be in dire need of help.

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The Benefits of Discount Brokers

  • Discount brokers offer their clients with significant advantages over full-service brokers. Some of the benefits of discount brokers include:
  • Lower cost, which is as a result of reduced commissions. This is the core benefit of using discount brokers. Another way you are going to benefit from discount brokers is that they offer unbiased services.
  • The fact that they don’t offer advice makes discount brokers to have no vested interest in trying to sell you any particular stock.
  • Discount brokers are also a good source of information. They offer extensive educational materials on their websites or at their offices.

However, there some things that you need to watch out for:

hidden charges, while discount brokers may advertise about their lower commissions, their commissions are not the only way that they make money. Most of them will charge extra fees for services that you may think are included such as mailing of statements, and issuance of stock certificate; also be wary of minimal customer support. If your broker is based online, take your time to find its customer service ability. If you cannot carry out transactions online, find out where you can call for any help with orders.

Setting up an Account with Online Discount Brokers

1. Registration

The first step to opening a discount broker account is entering the basic personal information like the social security number, physical address, and basic contact information. You will also be required to own an active checking account.  The majority of investors already have checking accounts. The discount brokers can use your existing checking account whether it is an online company or a local bank.  You will also be required to answer questions about your risk tolerance, time horizon, your investments objectives and the extent of your financial knowledge to building an investor profile. The majority of the firms will require you to categorize your investing inclinations for example income, preservation of capital, growth and speculation. This will depend on your level of aggressiveness when it comes to investing, whether a conformist, moderate or highly aggressive investor. You will also be required to have secure Internet access. You are discouraged from trading form a public computer, as all your sensitive information is available on your account. Setting up an account is very easy and you can do it within an hour. The next step would be to fund your account based on the minimum requirements and your strategies for investing.

2. Account Funding

Some brokers require you to have a checking deposit confirmation in order to verify the account and routing number you have included during registration. Usually, this will involve making two small deposits in your checking account.  Once the amounts reflect on your checking account, return to the brokers’ website and confirm the amounts. Once the verification of the account is done, you can start transacting money to and from your checking account. This is only possible with an account that has been cleared. For you to withdraw funds, it will take up to three days for the funds to clear. It will also take some time before the money you deposit in the account is available for trading. Actually, many discount brokers hardly have any type of minimum balance to begin trading. If you choose to use the standard ban transfer methods, there are no fees that will be charged. If on the other hand you want to have a cashier’s check or money wired, you will be charged a fee. Given the fact that the standard transfers have no fees, it is possible to fund your account with as little as one dollar. The moment you get an adequate amount of funds, you can then start funding.

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3. Making your Initial Trade

With your account funded and the money reflecting, you can make your first trade. You need to know the symbol of the company that you would wish to buy or sell stock in. some discount brokers will allow you to but partial stock shares so that you can buy a fraction of a share of an expensive stock. This allows you to buy an expensive stock without necessarily having the full amount required. You must find out how many shares of stock you can afford and keep it in mind. On the stock order screen, you must have the sticker symbol and the number of stock you intend to buy. If you wish for a limit order, try entering a lower price for the stock than what it is being offered at. The broker will then perform the trade at the lower price you want. You must note that you are buying a stock from someone else. This is the same when you will be selling a stock; there is someone who wishes to buy it before it is over. Online brokers will never send you a stock certificate but you can always request them to send it to you for a fee.

Discount Broker in UK-The Cheapest Way to Buy Shares

A discount offers investors with numerous benefits such as the convenience of online investing, diversification of investment portfolio and accessibility to a many different investment alternatives with fewer charges. The majority of discount brokers provide self-service online investment accounts that allow you to sell or buy almost any investment type available on the market.  Discount brokerage accounts are ideal for investors who are well knowledgeable about investments, those who prefer to research their investment choices, those looking for numerous investment alternatives and those that prefer to manage their investment accounts. If you are looking for the cheapest way to sell shares one off, discount brokers will offer you the help you need. They are knowledgeable the trade market and thus will offer you with the cheapest way to sell shares. Everyone interested in investing should give this a try. You can read more on discount brokers and their services online.


The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.