It is important for beginners planning to invest in Indian stock market to choose the right broker in accordance with their needs and trading profile. There is a plethora of online stock brokers in India making the task of selecting the right stockbroker all the more complicated. These are some of the facts about stock brokers in India, which must be kept in mind by potential investors.
The stock brokers in India can be divided into two categories.
Discount stock brokers
The brokers offer an online trading facility to brokers at discounted brokerage rates. Such brokers do not provide investment advice or any other services such as stock research, Mutual Funds and investment in IPO’s NCD’s and Bonds. The Discount Brokers offer the Lowest brokerage in the form of a flat fee. Discount stock brokers are popular among online traders because apart from low brokerage rates, they also offer a good online platform, best mobile app for stock trading and good customer service.
Day traders who open their positions for just a couple of hours or minutes and do not leave them open overnight should go for Discount Brokers. Such traders have no need of paying high brokerages and can get Best Trading Account for Intraday trading at very low brokerage charges. Swing traders who keep their accounts open for days and are not in need of tips from the broker can also go for Discount traders.
Discount traders have been around since 2010 and have proved to be highly beneficial for traders with limited capital.
Full service stock brokers
Full service stock brokers provide a range of services such as analysis and research reports, trading tips, investment advice, professional help on specific trades, etc. The brokerage rates charged by such brokers are much more than discount brokers. The brokerage cost depends upon the volume of the trade. In order to start trading with such a broker, the trader first needs to transfer the funds to the broker’s account. This means that Full service brokers do not offer savings bank account to their clients. Full service stock brokers are present all over the country unlike discount brokers who have a limited presence. Full service brokers are also associated with high speed trading.
People who are new to the stock market need the assistance of Full service stock brokers to understand the market better and learn the nuances of investing and trading. Swing traders who require tips and recommendations from the broker should also go for a Full service broker. Investors who do not trade much but mostly buy and hold shares should also hire a Full Service broker.
Other important points
The stock broker should be checked against the following list prior to hiring.
- The broker should be registered with SEBI short for Securities and Exchange Board of India.
- The broker should have a membership of BSE, NCDEX, MCX or NSE exchanges.
- The trading platform offered by the broker should be replete with features with a user-friendly interface which runs smoothly on all the platforms such as desktops, mobiles, tablets and others.
- The broker should have many clients and must be high on demand among traders.