With the increase in internet usage in India, more and more trading is being done online. This has led to a new type of brokers, which are known are as Discount brokers. Discount brokers provide very competitive brokerage rates with good customer services.
What are Discount Brokers?
The discount broking is a concept where a broker charges relatively lower commissions as compared to market norms and attract the existing clients of other firms in the field. Since the rates are significantly lower, they usually resort to automated servicing- mainly online. Discount brokers typically do not charge an annual service fee or maintenance fees on their customer’s account.
Discount Brokers in India
Discount broking is a very recent trend that started just five years back in 2010. Discount brokers charge a reduced commission and do not provide investments advice. The best known discounts brokers in India are Zerodha, RKSV and Tradejini; there are also few smaller players in the market as well, but based on the returns these three are the largest. Charges are kept low because discount brokers offer fewer employees, fewer products, and no advisory teams. Lately, discount brokerage is becoming very popular in India as more and more people have access to internet and several people are now investing using their own knowledge.
Advantages and Disadvantages of the Discount Broker
Working with a discount broker can provide cheaper access to investments. This can lead to bigger profits and better decisions..
The biggest advantage of working with a discount broker is that the investor can save a lot of money on transactions. When working with a full service brokerage, investors usually have to pay hefty amounts of money in commissions to brokers. These commissions might be a flat fee or they might be based on the volume of the trade. If one trades frequently, these commissions can add up quickly. By working with a discount broker, an investor can save large amounts of money and increase profits.
Discount brokers operate in a more straight forward manner. Discount brokers offer a trading platform for their customers to make the trades of their choice. They don’t offer advice and guidance and are there typically to facilitate the transactions their customers wish to make. Discounts brokers rely on offering a quality, efficient service that enables their customers to buy and sell investments easily.
Definitely, by using a discount broker you do lose out on the advice you are entitled to when using a full-service brokerage. However, several online discount brokers have a variety of trading and researching tools which can, in part, offset this disadvantage.
With a discount broker, you might also risk giving up some features and services that you would be able to get from a full service brokerage. With a discount broker, you might not be able to invest in as many different types of securities as with a traditional broker. Most of them are only going to focus on the most popular types of securities. This is going to restrict your options and it could seriously affect your profits in the long run.
How to Choose a Discount Broker
RatesMany of the adverts that you will see for discount brokers focus on the price-per-trade. Choose a discount broker that provides lowest price-per-trade.
Other feesBeyond the price-per-trade, you will find that brokers may charge other fees, including fees for closing an account, fees for transferring assets into the account, IRA custodian fees, account inactivity fees, wire transfer fees, annual fees and charges for not maintaining a minimum required balance.
Customer serviceIt’s important to know the kind of customer care service that the brokerage offers. In researching you will certainly want to see how the brokerage does at sending you all vital material you ask for online.
Investment product selectionAll discount brokers will offer stocks on the major exchanges although choices such as government bonds, options, corporate bonds, and the like are not available through every brokerage. Determine what you expect to need.
Which Are The Best Discount Brokers In India?
The top 5 discount brokers in India are listed below,
Zerodha is among the first few discount brokerage firms in India. The company was established in 2010 and started their operations as discount-brokerage firm. When most of the brokerages firms were charging large amounts of money, Zerodha started charging Rs 20 per-trade and change the entire industry. Today, the company caters to almost 10L clients. Apart from an exceptional brokerage proposition, they offer fully automated sign up with online opening form. PI is Zerodha’s new trading platform with exceptional and advanced features like backtesting, advance charting, and many more other features for trading in India Stock Market. With the help of this new PI software, the trader can test multiple trading systems on multiple markets, stocks and products in a very short time. Zerodha PI trading platform is going to be the fastest trading platform in terms of speed of quotes updates and it additionally reduces the bandwidth utilization.
RKSVRKSV started their operation in 2012 and offers 3 different types of brokerage plans. The plans are targeted for Passive traders and Active traders with rates on per trade basis as well as fixed amount per month per segment. Their final plan at Rs 9,999 offers unlimited trading per month for all segments.
SAS OnlineSAS Online offers trading at Rs9 per-trade along with an exceptional proposal of unlimited trading plan. As per unlimited trading plan they offer unlimited trading equity at Rs 999 per month. What’s more, unlimited trading in MCX is at Rs999 per month and in currency is Rs 499 per month.
Trade Smart OnlineTrade Smart Online was founded in 1994 and has a long track record in Indian stock market. Presently, Trade Smart Online provides online brokerage services in NSE Cash, NSE Currency derivatives, NSE FNO, BSE Cash and commodities.
TradeJiniTradeJini is a discount brokerage firm that offers an integrated platform for derivatives, commodities, equities, and currency with flat Rs.20 per trade. They aim to break the traditional wall of percentage brokerage. TradeJini also offer phone based trading with an extra cost of Rs20. Per trade.