A discount broker is a financial institution or individual that facilitates the buying and selling of financial instruments (such as stocks, bonds, and exchange-traded funds) on behalf of investors at a reduced commission or fee. Unlike full-service brokers, discount brokers typically offer a more streamlined set of services and charge lower fees by eliminating certain services, such as personalized investment advice and research.

Key characteristics of discount brokers include:

1. **Low Commission Fees:** The primary feature of discount brokers is their emphasis on low transaction costs. They charge lower commissions or fees for executing trades compared to full-service brokers.

2. **Online Trading Platforms:** Discount brokers often provide online trading platforms that allow investors to place orders, monitor their portfolios, and access financial information independently. Online trading has contributed to cost reduction and increased accessibility for individual investors.

3. **Limited Advisory Services:** Unlike full-service brokers who provide personalized investment advice and financial planning services, discount brokers typically offer limited or no advisory services. Investors using discount brokers are expected to make their own investment decisions.

4. **Research Tools:** While discount brokers may offer some research tools and market analysis, the depth and extent of these tools are generally not as extensive as those provided by full-service brokers.

5. **No Frills Approach:** Discount brokers operate on a “no frills” or “self-service” model, where investors perform their own research and trading. This approach is suitable for investors who are comfortable making independent financial decisions.

6. **Accessibility:** The lower fees and online platforms offered by discount brokers have made investing more accessible to a broader range of investors, including those with smaller portfolios.

7. **Execution-Only Services:** Discount brokers primarily focus on executing trades rather than providing comprehensive financial planning or investment management services. Investors using discount brokers are responsible for their own investment strategies and decisions.

8. **Educational Resources:** Some discount brokers may offer educational resources and tools to help investors make informed decisions. However, the level of educational support varies among different discount brokerage platforms.

Investors often choose discount brokers if they prefer a more hands-on approach to their investments, are cost-conscious, and do not require extensive advisory services. It’s important for investors to carefully consider their own needs, level of experience, and the services offered by different brokers when choosing a brokerage platform.