7 Tips On How To Choose A Stock Broker In India

In my opinion, stock brokers play a vital role in your investment journey. But there is no definitive guide on how to choose a stock broker in India suitable for your trading or investment needs. In this article, I am going to give some pointers on how to select the stock broker based on my own experience.

While selecting a stock broker first point is not fall for the advertisements you see in social media or TV commercials. Mostly they are gimmicks. Also, dont get influenced by the call you get from executive of broker. Verify the facts through the points I am going to provide below, ask questions and if satisfied, then go ahead to open the account.

Take advice of your friends or colleagues who already have experience in stock market, they may be able to suggest you the best stock broker in India as per your need.

How To Choose A Stock Broker – Key Factors To Consider

There are multiple factors you need to evaluate when choosing a stock broker. Below are the key factors one must check while choosing a stock broker in India:

#1. Credibility and Background of the Stock Broker

Even if you forget rest of the factors, never miss to check the credibility of the stock brokers before opening a demat account with them.

The stock broker should be registered with Security Exchange Board of India (SEBI), which is the regulator of Indian financial markets.

Make sure they display the stock broking license obtained from SEBI on their website. Also check NSE and BSE registration number.

This gives credibility and trust factor for the stock broker. Also check history of the broker, how long they have been in the industry and how their growth has been.

#2. Brokerage and Other Charges

Brokerage plays crucial factor because the charges make big difference in your trading/investment ledger.

If you are a trader, they you should always go with a leading discount broker such as Zerodha or Upstox.

If you are a investor who barely transact one or two times a year, then full service broker may be best match for you.

If you are not aware, full service broker charges on percentage basis, normally in the range of 0.1% to 0.5% of total traded value.

Discount brokers charge flat brokerage like Rs20/trade irrespective of the transacted value. So recently, more and more customers are opening their first demat account with a discount brokers compared to few years earlier.

#3. Hidden Charges

When opening the account, the reprasentative from the broker talks only about the brokerage. But usually, few more charges are levied which they wont tell at the point of discussion.

Make sure that you check the list of entire charges is provided to you and preferably published on their website.

Few brokers also provide brokerage calculator so that you can know how much you are going to pay apart from brokerage.

There will be statutory charges like taxes and stamp duty which are levied by government. They can not be termed as hidden charges.

Transparency is the real parameter here.

#4. Technology and Platform Offered

Checking the trading platforms offered is another key factor when choosing a stock brokers. The broker should provide both web, desktop and mobile based trading platforms.

Check out the technology behind the platform. How robust it is and the other technical parameters like User Interface, latency and ease of use.

If you are not that much tech savvy, check out the reviews posted on google playstore where the real users who already using the app are posting their reviews.

Also by checking the videos on youtube may help in understanding the features of the platform, what indicators they offer etc.

#5. Customers Support From the Stock Broker

No point in having superior app or platform if the brokers is not there to help you when you need him the most. A good stock broker should provide you with multiple mode of contact to reach them when you are looking for help.

A stock broker with outstanding customer service will have a loyal customers who in turn will bring in more customer to him.

Normally, nowadays all the communication happens online. So phone support and email support are must.

Make sure they create a service ticket as soon as you raise any issue/complaint which will have all the details such as issue details, date of creating the ticket, person assigned to resolve the issue etc.

#6. How To Choose A Stock Broker – Range Of Products Offered

Nowadays, customers are not investing only in shares but also in other instruments such as Mutual Funds, bonds and ETFs etc

You may not need all these products right now, but believe me you may get interested later on. So no point in opening another account with another broker just to use another product. It will add up your expenses like Annual Maintenance Charges (AMCs) etc.

The minimum segment a stock broker should offer is equities, derivatives, currencies and commodities.

#7. Banks Supported For Funds Transfer

Make sure the broker you are choosing supports the online fund transfer either through NEFT or UPI.

Few stock brokers charge payment gateway charges of Rs9 for fund transfer using internet banking. In those cases, it is better to use UPI to save on those costs.

Apart from that, the fund transfer between bank and broker should be fast and easy. Because you may just want to place a high conviction trade but if you are not able to transfer the funds they it becomes really frustrating.

Similarly, check after how many hours the funds will get credited back to your bank account once you place your withdrawal request.

#8. Education Initiatives

It is just a desirable characteristic of a customer centric stock broker who is interested in education of his clients.

Normally brokers conduct online seminars and workshops. Few brokers have published online education modules.

Shaerkhan conducts online seminars only for their clients and Zerodha has open to all module called Zerodha Varsity.

How to Choose a Stock Broker – Final Thoughts

Nowadays there is not much difference between two brokers due to advent of technology and internet penetration. Earlier it was very much desired that their should be a stock broker branch in your city so that you can visit there to get service.

But that is no more major parameters to select a stock broker in India now. The actual parameters which you look while choosing the stock broker are explained above in this article.

If you still need any help in choosing your first stock broker, please let me know through comments.

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