Talking about Investment and Trading in Stock Market and its return is very exciting. People fall into prey by looking at the profit screen of someone else. They are highly excited about trading and investment. They are in too much hurry to start trading. In this excitement, they forget to do some basic research and analysis about how to open and where to open their trading account?, which broker is good for them?, What type of broker they should choose? what additional services they required to stay profitable in the stock market?.
Types Of Brokerage House
Basically there are two types of broker available:
01. Full-Service Broker:
These types of brokers provide you with Trading & Demat Account along with their additional financial services like market analysis and etc. Full-Service brokers are Angel Broking, HDFC Securities, SBI Securities, Axis Direct, ICICI Direct, Kotak Securities, etc.
02. Discount Broker:
They only provide Trading & Demat accounts but do not provide Additional Financial Services. Their only job is to place your order on exchange as soon as possible. They don't have a dedicated team for Research and Analysis of the stock market. Discount-Brokers are Zerodha, Upstox, Groww, Paytm Money, Fyers, SAMCO etc.
Whether it is a Full-Service Broker or a Discount Broker there are some key elements you should always consider while choosing them. After all you are going to give them your hard earn money, if your money would spend just for paying their service charges then at the end you will feel cheated and depressed.
Things to Consider While Choosing Broker
01. Background of Broker:
This is the first thing you should do before opening his account and handing their money to the broker. Check for their working history in the market and how clients they have. Generally, it provides an overview of brokers' ability and reliability, whether the broker is regulated and oriented for their customers or not.
02. Broker Availability for trades:
You should check for Broker Availability. By saying availability, the broker should have a good technological infrastructure for handling large volumes of trades. There trade placing infrastructure should be robust for placing Trade Orders. The broker should be available for placing trades order through other mediums if there is any problem traders have faced while placing their trade orders, like trade orders through phone calls or SMS.
03. Minimum Amount required for trading Account:
Some Brokerage house has a set limit of minimum balance for opening a Demat and Trading account. traders and investors are suggested to maintain that minimum amount as a margin amount. some brokers also pay interest on that amount, but they are few like ICICI Direct, which pay around 4 % p.a. interest rate on your trading account balance. So Before you proceed further keep it in your mind that whether you have that much amount to give your broker as margin.
04. Add-on Financial Services:
Some reputed brokerage houses provide market analysis and periodic business insights & newsletters to their clients. Some broker provides APIs for custom trading software, some provide Exchange Data Feeds and other services. do ask about it if you are interested.
05. Charges for Services:
Always ask the broker about their charges related to their add-on financial services and the brokerage charge. Some brokers deliberately skip this part and don't discuss their hidden charges, they only discuss the brokerage and STT charges but don't want to talk about other hidden charges.
06. Reviews And Complaint Resolution Status:
The Internet Era has provided lots of opportunities to solve your problem within few minutes. Do some online research about the Broker. Read the user review about that broker, Search how brokers respond to the queries and complaints raised by their users. Find out how many Complaints is been logged against the brokers. But always keep in mind that all that reviews are not genuine whether it was positive or negative reviews. Some users lose money in the market and for their loss in the market, they blame their broker for it ( which is not the brokers' fault at all!) and also write bad reviews. Trading is an emotional game, in emotion people likely to make mistakes. Be cautious about such types of reviews.
Last word before you begin your search operation
At the end of all these key element I hope you understand why you need to do little bit research about the broker. In the market news came after time to time that due to some wrong practices broker went bankrupt and they have lost all the investors money. Its okay that our government & regulatory authorities are have a close watch over the broker actions but cautions are necessary to take at own level. Be a little vigilant and bad practices won't take place. Don't be in hurry, Stock Market is not going to shutdown & few days of patience will keep you unburden from doubts. Do the research, Read the Research, Analyse the Research and Refine it then take the decision.