Thread: tips before hiring a stock broker

Abundance of choice leads to confusion. Given the proliferation of market professionals, this also holds good when an investor is looking for a right broker. Here are a few factors you may consider while selecting one.

You should first ascertain your objective. Are you a trader or a long-term investor? The quantum of investment is also important. Even for a sum as small as Rs 5,000, transaction costs such as demat and brokerage charges can eat into your returns and not make investing a worthwhile exercise.

For delivery-based transactions, charges are around 0.5%. There are exceptions where you may find brokerages charging in excess of 0.75% for delivery. Some also put a condition of a minimum brokerage of say Rs 25. For intra-day trading, the range is wider from 0.01-0.15%, depending upon the volume you can offer to the broker.

Broking is a service where your personal level of comfort is important. If you are used to internet banking, a web-based trading platform may work well. If not, you can choose a broker who accepts orders over the phone. Some internet broking services do take phone orders as well. Ensure that your broker has an efficient system to collect money from you. Online money transfer is offered by most large-sized and institutional brokers. This saves time and effort.

On the face of it, it makes sense to go with the cheapest. However, for a small investor, sometimes brokerages with higher cost may work out better if the broker offers a linked-trading platform with seamless fund transfer and order execution. It has been observed that the integrated broking platforms are cheaper than the low brokerage platforms where an investor has to manually hand over the cheque.

There are a few elements beyond brokerage. Some brokers charge a one-time account opening charges while many have waived off this charge. Then appears the annual maintenance costs (AMC) for demat account. However, many brokers have come up with schemes where for a guarantee of volume or for a fixed sum of brokerage you may trade as much as you want with no AMC. Most brokers also offer depository services.

It makes sense to keep the demat account with the broker as it saves on costs. However, if you are not comfortable with the risk-management system of the broker, you can always chose to keep it with a reputed bank. Though, banks do charge more. Besides annual charges, every time you sell, you have to pay Rs 25 or as a small percentage of the value for using the demat account. Some brokers charge as low as Rs 10 per scrip when you sell.

A point to note, even in schemes, where for a fixed sum of brokerage you can trade as much as you can, for every outgoing scrip you have to pay this charge along with statutory duties. Some brokers insist on opening an account with a particular bank. This may further escalate costs, as investor is forced to open an account and adhere to an additional set of rules, including a minimum balance, which in some cases is as high as Rs 10,000.

The price you pay is for a service, and hence, the service components are to be seen in detail. The basic elements such as contract notes can be a bone of contention. A player like ICICI webtrade issues digital contract notes. Although some investors may not be comfortable with digital contract notes, these are more secure than their physical counterparts.

Check the frequency at which the demat statement and ledger statement (the cash transaction history) are given to you. Some broking outfits offer an online access to these. However, check if a request for an additional copy of a statement attracts any charge.If you are a T group investor, check if the broker allows a hassle-free trading in such stocks. Equity research is generally free. But some brokers do offer premium services to their clients. Check what are you getting free and what is paid.

Risk management systems are also necessary. In times of market turmoil, an efficient risk-management system offers stability to the brokerage. An absence of which can lead to a disaster. Especially for those who are active in derivatives, having a fair idea of risk management system is mandatory.

i dont want to hire one.
but want to do trading on my own.

i have heard that User can create multiple market watch,

with 200 scripts-each in Reliance Money Super trade. You can add

NSE, BSE, FONSE and ETFs on the same market watch.how good you

guys think it is?