Choosing a right broker is the first step to successful trading/investing. Since there are so many brokers present in the market to do the same job, it is hard to pin down one for all. To make things easier, we are listing down 5 points you must consider while choosing your stock broker:
Intraday traders- shall consider a brokerage that offers fixed brokerage irrespective of volume traded. As a day trader,it is imperative to keep the costs on lower side so that it doesn’t eat way a large part of the profits as the volume traded is generally higher. There are 5-6 discount brokers in India like Zerodha, RKSV which offers flat fee on every trade.
It doesn’t matter if you trade 1 lot or 20 lots, the brokerage charged is flat. Brokerage range varies from Rs 10-20 per trade.
Investor- If you are an investor having a holding period of >1 year, then the transaction cost doesn’t make much difference as it is one time fees paid. You may opt for full service brokers that provide quality research reports, which may assist you in making the investment decisions.
The brokerage range offered is 0.20-0.90% of the turnover. There are >20 full service brokers available in Indian Markets. Some of them are ICICI Direct, Kotak Securities, India Infoline, Angel Broking, Reliance Money etc.
2. Platform accessibility
Before zeroing on in a broker, check whether the platform offered by the broker is user friendly. It is important to ascertain that the website runs properly during the trading hours because if you are a day trader/short term trader, you will need to trade frequently & if you choose a broker with poor interface, chances are you often get stuck in between a trade that may directly affect your performance.
3. Ask for feedback:
Before opening account ask for reviews by the people who have already used it.
- How is the platform/terminal
- How is execution speed
- Availability of Level 1 and Level 2 quotes
- Availability of intraday and historical charts
- Service on phone- Though many of the brokerages provide independent RM to individual accounts, it is NOT always the case. Some discount brokerages skip this & even charge you extra for placing an order through phone.
4. Margin provided:
Margin provided by the broker on you capital is an important criteria to consider for active short term traders. The discount brokerages mentioned above generally provide only 1 time margin to be carried over for delivery. So, if you are among those who would need margin for delivery, it is better to opt for full service broker who provide good margin on your capital and offers the minimum brokerage among the lot.
5.Bargain for the best:
Lastly, remember there is no criteria which says ‘One rate for ALL’. You can always bargain for reducing the brokerage charged by the broker. If you have a good capital base and trade frequently , many full service brokers will certainly reduce their brokerage, if you ask for it.