Selecting the best stockbroker for an investor can sometimes be a hassle, and amidst this hassle, an investor may go for a stockbroker that is not fulfilling his requirements. So, before taking the final step of selecting a stockbroker, one of the most critical components that an investor must not ignore and go through is the stockbroker reviews.
The stockbroker's credibility can be assessed by the customer reviews, which are generally honest and gives to-the-point information regarding stockbroker's services and how well they execute their services.
Stockbrokers review aids you to get a modest bunch of data in only a couple of sentences, for example, what are they charging per trade, what sort of securities they are handling, are they offering any extra assistance at the same rate that other stockbrokers are not providing, how beneficial are their monthly plans, are they giving you an incentive to invest with them and lastly how well organized and experienced is their customer service. Moreover, the stockbroker reviews also tell an investor about the services they are lacking.
For an average investor searching for a stockbroker he must review and read the most crucial aspects of the reviews. These include their charges per trade, are they providing diversified trading services such as equity, currency, commodity trading, and finally, are they serving any over the top services such as banking, insurance programs and that too at a similar rate which separates them from other stockbrokers.
However, an investor must not only rely on stockbroker reviews, but he should take account of the average rates that the stockbroker market is charging. This will help an investor to reach the most optimal decision. The upfront fee that an investor must pay is the account opening fee, which varies from Rs.0 to Rs.200 for various brokers. Your stockbroker account's annual maintenance charges are around Rs.300, and different stockbrokers have one of the two depositories: National Securities Depository Limited (NSDL) or Central Depository Services Limited (CSDL). Once an investor has opened his account and paid the upfront charges, he has to bear the charges per executed trade, basically the stockbroker's service charges. The equity delivery, equity intraday, equity futures, and equity options have a fixed rate of Rs.20 per executed trade. Apart from just equity trading, some stockbrokers also offer currency and commodity trading. They have a nominal rate of Rs.20 per executed trade of currency futures, currency options, and commodities.
The charges mentioned above can be stated as the apparent charges, but there are many other hidden costs that investors are not aware of. The Securities and Exchange Board of India (SEBI), the regulator of the security and commodity market, charges Rs.20 per crore on the investor's value of the transaction for their turnover.
Other minor charges include stamp duty charges, which vary from service to services, such as Rs.200 per crore on equity and commodities futures and options trade, Rs.10 per crore for currency and bonds.
A GST of 18% is charged for brokerage and transaction, and STT (Securities transaction tax) varies, namely Rs.10,000 per crore for equity delivery trades, Rs.2500 per crore for equity intraday trades, Rs.1000 per crore on equity futures, and Rs.5000 per crore on an equity options trade. These are all the minor and significant changes you as an investor can face if you are opening a stockbroker account. Still, apart from the charges, stockbrokers provide a wide range of offers that act as an incentive for new investors.
Some of the offers that you must keep an eye on is the free stock trading and Demat account, flexible trading plans, brokerage coupon discounts, happy hours, and holiday offers, which allows you to use stockbroker services at a discounted rate at a specific time slot and on special occasions respectively, and zero brokerage on loss trade which means that your money will be refunded if the trade turned out to unsuccessful.
Leverage is another essential factor to consider while going for a stockbroker. An investor can increase his exposure on a specific trade using leverage from his stockbroker. Different stockbrokers provide different leverage ratios, e.g., leverage of 1:100 means that for every Rs.1 of an investor's share capital, he receives Rs.100 from the stockbroker to trade with.
Throughout the years, the stockbroker industry has evolved drastically. They now offer various services from mutual funds to systematic investment plans to complete banking services, helping investors build their long-term portfolios consisting of securities, government bonds, and currencies with maximum returns and minimum risk. Many top-performing brokers also provide insurance plans for their clients. All these services attract new investors, and later on, they become long-term loyal clients.
Discount and full-service brokers are a branch of the brokerage industry and as the name suggests that discount broker offers services at a cheaper rate than full-service brokers. Discount brokers are usually not having the skill set to provide valuable investment advice and analysis. On the other hand, full-service brokers offer in-depth analysis of their trading strategy and focus on both fundamental and technical analysis while executing trades. Full-service brokers provide vital insight into stock's intrinsic value for long-term investment by analyzing fundamental, research, and company reports and predicting its growth rate in the future.
Lastly, a trading platform is something that an investor needs to analyze various stocks/currency pairs/commodities and execute the trade from that platform. The three major platforms are MT4, MT5, and TradingView, where MT4 and MT5 are used for Forex trading, and TradingView is used for all kinds of trading, from stocks to forex to commodities. All three platforms are supported by Desktops, Apple IOS devices, and Android devices. Among these three, TradingView is most used; it offers an extremely optimized user interface that makes it easy for the traders to analyze charts, calculate their expected risk and return, and add alerts on desired stock and forex charts.
Apart from these three major platforms, many stockbrokers now provide their own software, and you can link these platforms with your cell phone to get instant updates and SMS alerts for stocks on your watchlist.