Five Factors in choosing the best brokerage company in India
Last Updated: Jul -11-2019
Anyone who invests in stock market does not continue to do so if he or she does not get good returns. And, in order to gain the right returns it is important to find the right broker who can fulfill your investment needs. In the past, the number of stock broking firms was limited, which made the act of finding the right broker very challenging. However, that is not the scene today. The trader today, has a variety of options to choose from – discount brokers or full-service brokers.
In fact, with so many options on the plate, the investor feels more confused. While some broking firms are great at intraday trading and delivery, there are others who excel at commodities. In addition, there are countless parameters of judging a brokerage company, such as, their popularity, availability in different locations, brokerage plans and fees, trading platform, customer services, call and trade facilities, online and offline support system, number of products and services offered, and more.
To consider all of these factors while choosing the best brokerage company in India for oneself can be really difficult. Moreover, one wrong decision will put your finances at stake. In this blog, we will look at 5 factors to consider when you try to select the best stocking broking firm for your investment needs.
Although there are several factors that are important to look for, here are the top 5 factors that are not to be missed at all.
1. Trading Costs
Trading costs involve brokerage, annual maintenance charges (AMC), transaction charges, demat charges, taxes, and more. Hence while selecting a brokerage company, understand the trading costs in detail. Stock brokers can charge you brokerage in two ways,
a. Percentage Based – A percentage of trade value is charged as a brokerage fee
b. Flat / Fixed Brokerage – A flat fee is charged on every executed order irrespective of the trade value
There are certain full-service brokers who charge low brokerage if the trade value is high. Hence, the higher the trading turnover, lower is the brokerage.
There are some brokers who offer lifetime no AMC demat account, which can help you save the demat chargers. It is important that you understand the low brokerage charges generally result in higher profits. So, if you wish to gain higher profit while trading, then look out for a broker who offers you the lowest brokerage of all.
2. Margin Leverage
Margin exposure can be a huge deciding factor for those who are active intraday traders. Margin exposure facility basically allows you to trade multiple times during the day based on the available funds in your account. Some brokers offer margin funding against shares facility; allowing you to get funding against the securities that you hold in your demat account. Kotak Securities allows its investors to leverage intraday trading in equities for 50 times, which is certainly a profitable scenario.
Please be careful about the square off timings for intraday trading. Also, check for the terms and conditions before signing up to a company because the margin policy can be changed at any time based on the market volatility.
The traditional or full-service brokers have dedicated research teams that offer detailed market analysis, trends, recommendations, tips and tricks to their traders. These companies also publish reports on the market economy, IPOs, and latest market trends. This gives trading insights and helps the customers to analyze the trading opportunities in the market and make informed decisions. Hence, if you are a beginner in the share market, opt for full-service brokers who can provide you all the necessary information of the market, helping you take the right decisions at the right time.
4. Trading Platforms
This is another important factor that you must consider while choosing the best brokerage company in India. Your trading experience largely depends on the trading platform offered by your broker. Trading platform features, speed, user-friendliness, and reliability largely determines the popularity of the broking firm. Always check the trading platform carefully. Ensure that the trading platform has some advanced features like charting or market scanners.
Always read the reviews of the trading platform offered by the broker. Also, ensure that the trading platform is compatible with your preferred platform. For example, the trading mobile app should run smoothly on your phone and must be interactive and user-friendly. Do not forget to check whether the trading platform offered by the broker is chargeable.
5. Customer Services
Needless to say, this certainly is a factor that ranks top on the priority list of factors that help you choose the best brokerage firm. Customer services offered by the broker can include online customer care, relationship manager services, call and trade assistance, and face-to-face assistance or branch assistance services. Not all stock brokers offer all the services; so, look out for the one which offers maximum number of customer services. Ensure that the support services are strongly backed up by the customer care team, and is available at all times. Full-service brokers offer strong branch assistance but may lack in online customer support. Whereas, discount brokers are extremely proficient in offering online assistance but very rarely have any facility where the customer can visit and seek for help.
It is very important that the customer service team should be able to clarify all your doubts whenever required. Also, if you have any complaints then the firm must look into it and resolve the issue at the earliest. Hence, look for a broker whose customer services matches with your expectations.
Consider that after a thorough research, you have listed down top 2 stock broking firms; how will you choose the best one from both? Here are some pointers that may help you make the final selection.
Choose based on your trading requirements – The best stock brokerage firm should be the one that matches with your trading needs and preferences. Hence, list down your expectations and see how many of them are checked by your top 2 choices.
Read broker reviews – Traders tend to stick with the popular stock broking firms for some reasons. Try to understand those reasons. Read customer reviews about the broker / broking firm and analyze the quality.
Compare Brokers / Firms – Finally make a list of all the possible parameters and compare your top preferences. The firm that allows you to check maximum items on the list is the one meant for you. There are several review websites which allow you to practice the same. You can also subscribe to these websites for the latest updates on market news, investment tips, IPO, advisory, franchise, and more.
It is important that you conduct proper analysis with due diligence, and get all the necessary information and get your doubts clarified before finalizing the best brokerage company in India that suits your trading requirements.