Hi Friends, When you open demat account with a broker, you are actually choosing him as your partner in your financial success. Finding the best stock broker in India to suit your trading profile can be very rewarding and beneficial, for your portfolio and as well as your peace of mind. But with so many options to choose from, how do you select the right broker?. Don’t worry, read till the end and we are sure that you’ll find most of your queries answered by then.
Welcome to TheIndianStockBrokers.com (TISB), an information portal which helps a newbie and even a seasoned trader/Investor to find the ideal stock broker for himself. You can understand various types of brokers and do side by side comparison of Stock Brokers before zeroing on the good match for “YOU”.
Before dwelling into the “YOU” aspect, let’s have a look at the characteristic of a good Indian Share broker:
Each brokerage house is different and everyone have their own principles and strategical model. However there are few characters which every India based stock brokers worth their salt should posses. You should always avoid the Broker whom you feel does not display the below traits.
Types of Stock Brokers in India
The universe of Indian share brokers can be broadly classified into 3 categories depending upon the service they offer. Best way to understand it would be to watch the short video below. Our team has compiled a explanation video on types of Stock Brokers. It includes lots of example calculations and illustrations covering various scenarios on how to choose the right Broker.
1) Discount Stock Brokers
Discount brokers or Flat fee brokers are a recent trend in India since 2010. Discount Stock brokers offer only the necessary trading facility at the least possible cost. They charge much lower brokerage than the full service share brokers.
Discount Stock Brokers do not provide services like stock research, investment in IPO’s, Mutual Funds, FD’s, Bonds and NCD’s. and wealth management services. They just enable the traders to carry out online Share trading with bare minimum infrastructure at lowest brokerage charges typically in the range of Rs 10 to Rs 20. Zerodha, RKSV and SAS Online are some of the largest discount brokers as on today with excellent service.
Below table list down India’s few popular Discount brokers with high ratings and their Brokerage rates.
Major Indian Discount Brokers:
2) Conventional or Full Service Brokers
The full-service brokers offer a much bigger support to the client than the discount brokers – especially by providing analysis and superior research reports, trading tips, offering professional assistance and guidance on particular trades and so on. Understandably, the client has to pay extra for these services, hence full-service brokers charge much higher fees for their service than discount brokers.
However these brokers do not offer the savings bank account. The funds should be transferred first to the broker’s account before you can start trading. They have pan India presence as compared to discount brokers who have single or limited branches across the country. Angel Broking, Motilal Oswal and Sharekhan are some of the reputed full service stock brokers having franchises across the country known for their outstanding service.
Below table lists few major Full Service Stock brokers of India and comparison of their demat and trading account charges.
Major Indian Full Service Brokers:
3) Stock Brokers in India offering 3-in-1 Accounts
These are mainly prominent banks providing savings bank account along with demat account and trading facility on NSE & BSE akin to Full service broker. You need to open a savings bank account with them which will be linked to your demat account.
The transfer of funds in case of 3-in-1 Brokers is seamless and everything will be under your control. For example, in case of Full service Broker, whenever you sell any shares the amount will be first credited to Broker’s account. You need to login to Broker’s Back office and withdraw funds. But in case of 3-in-1 accounts, the funds will automatically get credited to your bank account whenever you sell the shares.
The Brokerage rates of 3-in-1 brokers is also on higher side similar to Full Service Brokers. ICICI Direct, Axis Direct are biggest brokerage arms of the banks providing 3-in-1 account.
Below table list the few leading stock Broking firms offering 3-in-1 accounts and their Brokerage rates.
What kind of Stock Broker you should Choose?
Now we have understood the types of Brokers. Lets understand how to select the category of broker for yourself. Before zeroing on the broker, you need to evaluate the type of Trader you are. Your trading style determines which one shall suite you best.
1) When you should choose Discount Brokers
- If you are a day trader who opens positions for a couple of minutes to a couple of hours and practically never leave them open overnight. Higher Brokerage will definitely cause big dent in your profit. So you should always go with Discount brokers who offer a flat fee. Discount Brokers offer Best Trading account for Intraday trading with lowest brokerage charges.
- In case you are a swing trader who leaves the positions open for few days, trade on your own and does not require any tips from your broker. Though you do not trade as frequently as a day trader, there is no need to pay for the services offered by full service brokers which you don’t need.
2) When you should choose Full Service Brokers
- If you are very new to share market, need guidance and require a dedicated relationship manager. When you start your journey in the financial markets, you definitely need someone who can assist you in understanding the basics. The full service brokers often conduct training and online webinars on the fundamentals of trading and investing. But it doesn’t mean that you will be profitable just by opening account with them. At the end of the day everything boils down to you.
- If you are a swing trader but require trading tips from your broker. They often send the recommendations generated from their research team and If you are well versed with basics but require short term money making tips like this then go for full service brokers.
- Suppose if you are interested in other products apart from trading facility such as mutual funds, IPOs and tax planning. Full service brokers offer one stop solutions for all your financial needs. If you are ready to shell out few extra bucks for their services, go ahead and open the account. Full Service Brokers provide Best Demat account for small investors and beginners at affordable brokerage charges.
- If you are Buy and Hold type of investor who rarely trades and brokerage does not matter in long run.
- Full service Brokers are known for thier suprior customer service and the good advisory team.
3) When you should choose Brokers with 3-in-1 Accounts
- If you are someone who does not want to transfer any amount to broker’s account but wish to have all the services which a typical Full service broker offers, then 3-in-1 type of account will be ideal for you.
You can also evaluate the broker based on the following factors:
- Trading platforms and Data feeds
- Wide variety of the features offered
- Cost Effectiveness but yet reliable
How to select the Best Discount Broker for Yourself?
Now that you have understood above points and puzzled about selecting one among the available Discount Brokers, lets see how you can select best discount broker for you.
We have tabulated the few important matrices of the discount brokers.
If you are looking for the broker offering lowest brokerage, at the first impression it looks obvious to go with SASonline as they are offering brokerage of Rs 9/trade. But what if we tell, you “MAY” be saving more if you go with someone like Zerodha or RKSV who charge Rs 20/trade?
Lets calculate the total charges for Zerodha and SASonline using the Brokerage Calculator provided by them. The calculation is done for the 1000 Nifty futures for the buy rate of 9000 and sell rate of 9002.
So as you can see, your out go is more in case of SASonline compared to Zerodha. Though SASonline charges less in brokerages, their turnover charges are comparatively high.
Does that mean you should not open account with SASonline? Lets do the same maths for another set of numbers. This time 100 Nifty futures instead of 1000.
That means, if you are trading low volumes (turnover less than around 25Lakhs) per order, then it may be beneficial to choose SASonline. In case you are trading with high volume, choosing Zerodha may save you some extra bucks.
Just see how the difference in transaction charges between two top brokers affects your total outflow in the graph below. We have plotted the total expenses for the Nifty Futures at 9000 for 10 buy and sell transactions per day for various lot sizes.
You can checkout the total expenses in your own case using the Zerodha Brokerage Calculator
Now its your turn to select the Best Share Broker:
We have tried to cover the basic aspects about the traits of a good Stock broker, Types of Stock Brokers, Services offered by them and at last who will suit your trading profile.
Needless to say, these are just quantitative aspects and hence you should ever forget to analyze them from qualitative angle, for that we suggest you to check out our reviews of some of popular Stock Brokers listed in below table before proceeding further.
Here is the list of 10 Best Share Brokers of India:
|2||Angel Broking||Angel Broking Review|
|5||RKSV||RKSV Securities Review|
|7||Motilal Oswal||Motilal Oswal Review|
|10||HDFC Securities||HDFC Securities Review|
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