For many investors, especially the newbies and novices, choosing the right share broking company is one of the primary factors that decide their success or failure in the stock market. Now you might be wondering how or in what way can a brokerage firm influence ones success or failure. The answer to this is a bit complex but those familiar with the nuances of the market know this better than anyone else.
To quote an example, Gaurav Sharma who’s a newbie investor, chose to use a lesser known brokerage service to invest in the stock market. While the broker offered both offline and online services, Gaurav could not execute a critical transaction during a volatile trading session and eventually ended up losing a huge sum of money.
Neither could he initiate an online transaction and nor could he use the telephonic service. The broker eventually cited technical issues because of which he was unable to execute the transaction and by the time the system was back online, it was too late.
Now it’s not necessary that this would happen every time or that lesser known brokerages are not worthy enough to consider for stock trading. However, when you choose a credible or reputed broker, the chances of bad or failed transactions are fairly minimal. And most reputed brokers offer services that are backed by years of experience as well as a strong technological infrastructure.
While there are several small, medium and large brokerage firms offering their services, it becomes imperative for you to choose the firm that best suits your requirement.
Here are a few aspects you can check to ensure that you choose the right brokerage service.
Ask for References
This is one of the best ways to start short listing a brokerage service of your choice. Ask around for references from friends, associates, colleagues and get to known their experiences with the respective brokerage services. The more people you ask the better as you would get to know a variety of positive and negative experiences. Do a bit of research yourself to understand the credibility of the brokerage service, the number of years they have been in the business, their technological expertise, customer reviews, etc.
Don’t Just Go by Pricing
So you’ve just been offered a cracker of a deal by a brokerage service for opening a new account and you didn’t possibly find anything wrong with the offer. But hey, did you check the fine print? There could be factors that would not have been revealed upfront and it’s your job to ensure that you thoroughly review the terms and conditions of the offer. That seemingly rock bottom brokerage rate might look tempting at the outset but there could be a catch. Dig deeper to find out what that is.
What’s the Minimum Investment?
The minimum investment required to start trading in stocks varies from one broker to another. Do ensure that you review this requirement before you sign up for an account.
Multiple Options for Trading
While you might have the best online share broker at your disposal to quickly and efficiently place your trades online, it is not necessary that you would always be in front of your computer to execute your trades. This is the reason why it becomes important for the brokerage firm to offer multi-platform trading options such as offline trading via phone call or even from other web enabled devices or a mobile phone. This will ensure that you have multiple avenues to place your trades no matter where you are.
Trading Tools and Platforms
This is a very important aspect that needs to be checked before you sign up for a service. Find out how robust and reliable is the trading platform and the respective tools. No matter how good the service is or how competent or knowledgeable the staff is, if the trading platform is unreliable or is riddled with glitches, you are pretty much looking at potential trouble in the future. Another aspect to review is to understand how easy or difficult it is to link your bank, demat and trading account. This goes a long way in ensuring that you have a smooth and effortless trading experience.
Review the Charges
Next up on the list is to review the various charges. There are several charges that are applicable to a brokerage account. These broadly include the account opening charges, brokerage charges, and maintenance charges. Brokerage charges further constitute of delivery and intraday charges. The charges of course can vary from one broker to another and you might also want to review the applicable taxes, which are uniform across all brokerages. Be advised that while you look for the most competitive rates, do makes sure to understand the reason why a particular broker appears to be charging more than the other.
Investment Insights and Analysis
Again, this is a standard feature across all major brokers and most of them provide analysis and insights on major market related news, stock trends, and a host of other information including access to charts and tools to help you take appropriate investment decision. The more extensive the data provided, the greater would be the advantage. Again, look for brokerage services that have a good history of providing credible investment advice and analysis in a timely manner.
Author Box
Kotak Securities is one of India’s largest share broking firm offering share market investment service, demat account, online trading, mutual fund and IPO investing service’s along with a research division specializing in Sectoral Research and Company Specific Equity Research. We also offer you the insights & information from share market thus keeping you updated.
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