Today we will be talking about how to choose a good broker for trading in India.
With so many options available these days ranging from full-service stockbrokers, discount stockbrokers, to bank based stockbrokers, and everybody claiming they are the good brokers for stock trading in the market, it can get extremely difficult and excruciating to choose a good broker for trading, especially if you are trying to enter the market for the first time. There are some key areas that you must consider to finally narrow down on the good online brokers for stock trading based on preferences that suit you well and you can finally choose your stockbroker for yourself.
Before jumping into choosing a good broker for trading, it is important that you address these 3 questions to yourself.
Are you open to learning from scratch?
Trading is something that will take time. The education needed for it is not magic. It will take months for you to grasp the basics and fundamentals and then take over the world. And yes you can definitely do that if you are putting in the time and effort to learn the basics and fundamentals and move on to advance strategies.
Are you a trader or an investor?
Understanding the difference is crucial in setting your journey in the market. A trader is someone who works on a short term profit system. He enters the market every day, finds something of profit, makes trades, and goes away. Investors on the other hand are for the long term. They buy some stock and forget about it. A few years down the line, they return to reap their profits. You must identify which class segment you belong to and which one suits your needs.
Will you trade on your own?
Are you going to make trades using the traditional method which is to rely on your stockbroker by placing calls and using the call-and-trade facility, or are you going to be trading on your own by using the trading platforms across devices and mobile apps given by stockbrokers? If you are opting for the traditional method, the good brokers for stock trading ensure minimum latency so that the trade order gets placed at the same time when you call the stockbroker.
There are different things attached to every stockbroker and depending on your needs we will filter out the right one to choose for you to begin your journey in the market. We will unfold every preference out there that people generally ask about and finally help you choose and finalize good online brokers for stock trading.
Brokerage and Other Charges
You must check if the brokerage charges are exorbitantly high or not for you to enter into the market. There are stockbrokers that charge you as high as Rs.1,500 for account opening and maintenance charges.
Then again, there are some stockbrokers who are opening accounts for free these days. There are those who charge a percentage of trade values which are commonly referred to as full-service trade brokers. And there are those who charge a flat fixed rate that is explicitly stated at the very start, which is charged irrespective of the trade value. These stockbrokers are termed as discount stockbrokers.
Good online brokers for stock trading ensure that there are no hidden charges and that every charge is explicitly stated through email notifications to ensure transparency.
This is a crucial part to look at especially if you are going to do the trading on your own. This is important due to the fact that every stockbroker provides some sort of trading platform but a lot of them are really not worthwhile using in the first place.
This is not a huge concern because you can always get it back. The only concern that holds is that the brokerage percentage will be deducted at the time of delivery. Lesser the initial deposit, the higher the brokerage charge you will need to shell out. An initial deposit of Rs.10,000 can lead to a brokerage of 0.45% per trade. An initial deposit of Rs. 1,00,000 can lead to a brokerage of 0.15%.
Research Team Expertise
Generally associated with full-service stockbrokers alone. The task of deciding on a full-service stockbroker with the most prominent research team, a daunting task on its own, can be made easier by looking at the credibility of the research team if they are appearing on news channels, their publishing’s in newspapers and journals. A visible research team is generally an indication of a good online trading broker.
Fund Transfer Process
Not an important factor to consider but a very tedious task for a day to day trader, especially when you are just entering into the market. What happens is that you need to transfer funds from your bank account into your trading account whenever you run out of funds. This process is simplified by bank stockbrokers. Major banks provide you with the facility of a 3-in-1 Demat account where your bank account is linked directly to your trading account and this fund transfer procedure can be automated as per your trade requirements.
This service is more concerning full-service stockbrokers and depends on factors such as turnaround time taken by the service, channels of customer service such as chatbots, availability of customer service personnel, support in multiple languages, structured escalation process, etc.
Associated with full-service brokers alone. Good online trading brokers in the full-service segment establish an offline presence with sub-broker franchise networks by creating a sense of tangibility and establishing a trust factor by providing clients with the facility to get in touch with their local sub-brokers and stay updated with the market.
Stockbroking is a regulated market in India and SEBI has put in a lot of controls every year to make sure no scams are happening up and around. However, these things do happen in some of the good brokers for stock trading too.
Do your research to identify if your stockbroker has a clean sheet or a past history of scams. Ensure your choice of stockbroker is registered by SEBI.
We hope that this guide was helpful to you for deciding on your stockbroker of choice.