As you are reading this article on how to choose a stock broker in India, it is certain that you are thinking of entering the world of stock market. Very good decision Investing and trading in the stock market, if done properly, can give you the highest returns as compared to other options.
As simple as it sounds, choosing a particular stockbroker is quite difficult. A wrong decision taken at this time can ruin the money spent in brokerage, time as well as other ample opportunities to earn money.
Before you think deeply about the other aspects to be considered while choosing a stockbroker, you have to decide on one particular thing – are you a trader, or an investor or both?
If you are a trader and will trade regularly, you will need to combine a high performing trading platform or platform with an affordable brokerage. There are many stockbrokers who provide you the service of making unlimited deals by charging a fixed brokerage charge or brokerage amount every month. This method may prove to be more effective in your relationship.
But on the other hand, if you are an investor and are interested in investing for long term then you will be more conscious of research and advice than worry about brokerage charges. However, if you are both – an investor as well as a trader who trades according to the market movement and movement – then your expectations from the market will be even higher.
If you are still having trouble in choosing a stockbroker, then you can also choose it by looking at the difference between a stockbroker and a sub-broker.
Let us now talk about the important aspects that will help you in selecting a particular stockbroker.
1. Different Types of Brokers
Till 2010, the whole world of stock brokerage was very scattered and uninhabited. All the stockbrokers used to charge some percentage of brokerage in every transaction in the name of providing a set of services. Therefore, the more you used to deal with the bigger amount, the more money you had to pay to the stockbroker. Such stock brokers were known as stock brokers working solely in the service sector. Then a few years later, the concept of cheap brokerage was introduced in the Indian stock market.
In 2010, Zerodha was the only company to adopt this business model in India. Affordable brokerage brokers do not provide gimmicky trading experience to their clients and mainly provide online services. They provide trading account and trading platform facility to their clients without any research reports or offices located in different cities.
Let's now think deeply about the other different aspects (in no particular order) and get you ready to make a decision by the time we get to the end of this article. Now we will give you some examples of stock brokers in this context (wherever possible) and will also discuss about both the aspects, that is, about good and common stock brokers.
2. Prices
The consideration of prices, along with the selection of other parameters and several specific reasons, plays a very important role. When we talk about prices, we mean:
Account opening fee or account opening fee
For opening an account with a registered DP (Depository Participant) you have to pay certain charges (this is called account opening / account opening charges). These charges are charged differently with different brokers and a stockbroker decides these charges himself. Some stockbrokers charge fees for opening the account by charging very expensive prices, while some also open this account for free.
Good stock brokers in this context are Religare Securities, Fires
Useless – Sherkhan, My Value Trade
brokerage fee
As mentioned briefly above, each different stockbroker charges different fees. Stock brokers operating in the service sector charge some percentage of the brokerage on the entire transaction value while discount brokers with cheaper brokerage charge a fixed amount without levying any charges on the trade or order value. Nowadays some stockbrokers even charge a monthly or annual fee on countless deals done in a stipulated period of time.
You have to be aware of this thing that how much amount you are paying as brokerage to your stockbroker otherwise you will also waste a huge part of your profit in paying the brokerage fee. Remember that you have to negotiate with the stockbroker even while opening your account. He will always explain to you that all these charges are already fixed by the company but brokerage fee can always be negotiated.
Good stock brokers in this context are – Zerodha, 5Paisa, Motilal Oswal, Bonanza Online
Are useless – Composite Edge, Sherkhan, ICICI Direct
Annual Account Maintenance Fee or Annual Maintenance Charges
You have to pay another fee annually to maintain your demat and trading account with your stockbroker. Like account opening charges, Annual Maintenance Charges or Account Maintenance Charges (AMC) are also charged in different amounts with different stockbrokers.
If you want to invest for long term and are not interested in trading regularly then we would suggest you to connect with a broker providing the service of cheap or free annual maintenance charges otherwise you may not get their continuous service Will have to keep paying this fee regularly.
Good stock brokers in this context are Upstox (or RKSV), SAS Online, IIFL, ICICI Direct
Are useless - Wisdom Capital, Geojit BNP Paribas, HDFC Securities
Initial Accumulation Amount or Initial Margin
Before trading in the stock market, you have to keep some fixed amount in your trading account as initial accumulation or margin. The margin amount is, in a way, the savings amount in your account. The percentage brokerage of a stockbroker working in the service sector depends on your huge advance margin amount.
The higher the initial margin you give, the less brokerage you will be charged. So make sure you negotiate with your stockbroker before promising a certain margin amount.
Other Indirect Charges or Hidden Casts
Some stockbrokers also levy some indirect charges or hidden charges which are not mentioned in the account opening process. Before trading by opening an account, ensure that you have discussed in detail with your broker and taken a written statement of the full fixed charges via an e-mail.
3. Range or range of trading segments/sectors
Different people are interested in investing or trading in different types of economic products which include Equities, Commodity, Currency or Currency, Mutual Funds, IPOs, NCDs, FDs, etc. Check out what different stockbrokers have to suit your needs by choosing your investment or trading preferences.
If you want to invest in mutual funds after a few months from today, then you have to make sure that the stockbroker you are choosing has the facility of investing in mutual funds along with other investment products. does provide
Good stock brokers in this context are Sherkhan, IIFL, Zerodha, Motilal Oswal
Useless - HDFC Securities, Semco
4. Process of Transfer or Transfer of Money
If you open your demat account with a bank based stockbroker (like ICICI Direct, HDFC Securities) then they offer you the facility of 3 in one demat account and you will not have to worry about transferring money every time. But if you open your demat account with a non-bank based stock broker (like Zerodha or Angel Broking), then you will have to transfer the money once you run out of money in the trading account.
Although most of the stockbrokers have online relationships with many banks to transfer money, still it can be inconvenient at times.
Good stock brokers in this context are – ICICI Direct, HDFC Securities, Kotak Securities
Useless – Sherkhan, Upstox (or RKSV), Semco
5. Geographical Presence
Many a times we want to meet a stockbroker personally through subbroker or franchise sources. The purpose of this meeting and discussion is to understand the waves of some listed stocks or portfolios and to gain a general understanding of market trends. At the same time it is important to have a stockbroker personally present in or near your area. This facility is not provided by all the discount stock brokers with cheap brokerage and on the other hand this facility is the main reason for getting more sales of all the stock brokers working in the service sector.
They spread their net and reach out to the people in different parts of the country, through subbrokers or franchise sources.
Good stock brokers in this context are Angel Broking, India Infoline (IIFL), Motilal Oswal
Useless – Trade Smart Online, Upstox (obviously all cheap or discount brokers)
6. Trading Platforms
In today's time due to digitization or integration of simple information with increasing technologies in the world (especially in India), online trading platform is the most important criterion for selecting a stockbroker. Although some stockbrokers still prefer to provide the facility of NSE, BSE based trading platform (which is good in itself) to their clients, but there are some who prefer their modern technology as their main attraction. features are proven.
There are also some who do not charge a brokerage on the deals, but charge a fee on the trading platform chosen by the client from their wide trading platforms.
Some of the important features of any trading platform should be as follows:
Software performance/speed
Real time feeds of current events happening
Reliable bargaining facilities
interactive or bidirectional charting
A trader may have higher expectations and want to get some more features. Therefore it is very important that the trading platform offered by a stockbroker meets your preferences and expectations.
Good stock brokers in this context are- Zerodha, Fires, 5Paisa
Useless – Trade Smart Online, Prostocks, Religare Securities, Semco
7. Expertise of Research Team
Whether you are an investor or a trader, you will always expect an expert research group when joining any stockbroker. A trader will seek advice, relying exclusively on research, so that he can place his trades accordingly. Discount stockbrokers with cheap brokerage do not provide market related or daily buy/sell advice, etc., whereas most of the service sector brokers provide this service through their own research group.
This team or group has experience of trading in different segments of the market along with the educational knowledge. They express their views by looking at the current condition of the market, through different TV channels related to the economy.
Many newspapers and journals such as the Economic Times, etc., regularly publish articles written by these experts. By paying attention you can understand who is more famous and giving their appearance in newspapers, journals, magazines, TV shows. You may not be sure but we know which is the main research group of the country.
Good stock brokers in this context are Motilal Oswal, Karvy Online, 5Paisa
Useless – Upstox (or RKSV), Zerodha, Prostox
8. Customer Service
The customer service provided by a stockbroker is more than just solving administrative problems. Customer service includes:
Complete solution to customer problems in less time
Customer service available through multiple channels, such as phone, e-mail, conversation, social media, bots, etc. Maximum customer service available during the day.
Providing customer service in multiple languages, such as Hindi and English.
If the problem is not resolved on time, the right process should be available for escalation of the complaint.
Although many stockbrokers are known for their very poor services, some stockbrokers provide decent customer service (however, customer service is a matter of concern). Do not believe because many times stockbrokers write fake reviews to go against their competitors.
A better way to test this would be to find out about the quality of customer service from your family members or friends who already have an account with the stockbroker of your choice.
Good stock brokers in this context are - ICICI Direct, Motilal Oswal
Are useless - Angel Broking, Sherkhan
9. History and Reputation of Stock Broker
The last but very important topic of the discussion is that we know and understand everything about the history and reputation of a stockbroker. Although, we discuss about discount brokers with cheap brokerage, most of the discount brokers are newbies and have recently established their business so you may not know much about their history.
But after the establishment of these stockbrokers, you can track the progress of these stockbrokers through the duration of their work in the market, the number of employees they have, their daily business or turnover, the segments provided by them, the number of their active clients, etc. can find out from.
As far as the stock brokers working in the service sector are concerned, the history of most is displayed. Some of the stock brokers have been established in the year 1980 and it is during this tenure that they have created a legacy for themselves. We can judge the respect of the stock brokers working in the service sector by their daily business or turnover, their subbroker network spread across the country, their reach in the parts of the country, their brand names, etc.
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