Questions You Need to Ask Before Choosing a Discount Broker in India

To invest in the stock market you need a discount broker or full-service broker to open trading and demat account with them. Because without having the demat account trading or investing in the stock market is not possible for anyone. As these brokers are members of the central depositaries like CDSL and NSDL also SEBI registered entities to open such accounts.

Also Read: What are the Benefits of Demat Account: Advantages & Why you need it

But finding the right broker is another challenging factor for retail investors. Especially, when there are a bunch of brokers offering freebies and lucrative offers to open demat account or a trading account with them and enjoy the various other benefits. But before you become a customer of such an entity you need to be very careful to find the best discount broker in India as per your needs.

8 Questions to Ask While Choosing a Discount Broker as per Your Needs

1. What is Your Goal of Investment?

Before starting any venture, you always set you goals, how much you need to invest, how much tension and efforts you would be putting into the venture and for how much time. So before stepping into stock market you need to define you investment goals, risk parameters, would you be trading or investment, etc. depending on the decision you take and the investment goals you need to decide whether you ended qualifies for a discount broker for your trading journey or a full time brokers for long term investing.

Also Read: Things to Consider Before Buying Stocks for Long Term: 10 points

Are you looking to trade or invest only are equities or also trade in the future and options market? Or you are looking for someone who can also help you in investing in ETFs, mutual funds and other investable instruments like gold, commodities and currency. Because according to your needs, you can check whether the discount broker can provide you with all such services or not.

As the name specifies, a discount broker can provide you trading experience with low cost brokerage, sate of the art trading platform, 5 min account opening process ready for trading but the drawback arises when you want research facilities and other investing services with them. So a client needs to make sure about such things before opening any trading or demat account with the broker.

2. Is your Discount Broker Reliable?

Although stock brokers and other financial institution are strictly governed under the strict provision laid out by the Regulator, i.e. SEBI. Besides that, a client before enrolling with the broker should check their background and credibility, as the newly floated discount brokers can sometime loosen up on their regulatory department to attract customers. You need to check their credibility and how long they are operating in this industry, their management and the track record of the company to become the client of a reliable entity.

The discount broker or full-service broker you are looking for should have a significant number of customers or users so that you get feedback from them or check the reviews of using their services. Moreover, also check registration status from SEBI and membership number or details with top stock exchanges like BSE and NSE. Apart from that if they have a compliance department and they are following the rules and regulations as per the SEBI and other regulatory authorities.

3. Can You Use Online Trading Platforms?

Discount brokers attract new age traders and office going investors, who don’t have time or habit to trade through dedicated trading platform. Seeing this demand meets supply and discount broker push toward providing mobile application, so if you are comfortable in using such advanced mobile apps then you can go with them.

Though, nowadays most brokers including discount brokers and full-service brokers are offering mobile applications and customized trading platforms to trade you online from anywhere during the market hours. If you are a conventional investor who needs to call the broker to buy or sell the stock or give access to your trading account to invest on your behalf. You need to think and check about such things as what types of trading and investing services you can handle.

4. Do You Need Tips or Research Reports?

To trade or invest in the stock market you should analyse the various factors so that you can take the right decision. If you are a trader do you need trading calls or tips to buy or sell the stocks during intraday or make positions in the derivatives market? And if you are looking to invest long-term are you looking for any kind of research report to analyse the fundamentals of the stock?

For intraday trading or short-term trading, you need a reliable tip generated after performing the technical analysis and for research reports, you need a fundamental analysis of the company. So can you analyse such things or do you need such reports from your broker on a regular basis?

5. Are You Ready to Pay the Charges?

To open and use the trading and demat account you have to pay certain charges. Though, many discount brokers provide either free trading accounts free demat accounts or both but charge high brokerage fees. While many of them ask for the annual maintenance charges for using the trading platform or demat account their brokerage fees are lower compared to other brokers.

So, are you ready to pay such charges for using the trading and demat account or trading with your discount broker? Make it clear everything about the charges and fees asked by your broker to determine how much it costs you to trade or invest in the stock market. You need to compare brokerage charges and trading brokerage fees of right discount broker or full-service broker before availing its services.

6. Do You Need Customer Support?

Anyone associated with stocks market with a stretch of time, might have heard of or tried trading in futures and options segment, and they would have also experienced how quick profitable position can turn into loss or the profit can decrease substantially. So when taking a long term position or trading in stock market, if face any kind of technical or non-technical issue, you need someone to help you in solving such issues quickly. At that time you expect your broker who is offering this platform to provide you customer support or this kind of assistance to help you online.

Most discount brokers don’t have the customer support service or not offered by human representatives. They use automated chatbots to assist their customers online and can solve only the limited queries and that is only by a chatbot mobile application. If you need to be asserted by the someone on phone to understand your problem and help you to resolve your query. So, make sure if your broker or discount broker offers this kind of facility or not.

7. Is Your Data and Fund in Safe Hands?

This is one of the very important questions you need to ask your discount broker or full-service broker before you become their client. Apart from giving your personal details like your ID, address proof, mobile number and email ID, you also share and connect your bank account with the broker’s trading account to transfer the funds while buying or selling the shares in the stock market.

Check the authenticity and security levels of the trading platform, and criteria to access your account or types of security layers used to protect such trading accounts. The verification process to log into the trading account and another authentication process while buying, selling and transferring the funds are protected with any kind of security software or authentication process or not. Any kind of loophole can invite hackers or cybercriminals to easily crack your trading account details.

8. Discount Broker or Full Service Broker, which one to choose

Nowadays you can find two types of brokers available in the market – one is a discount broker offering only the buying and selling of equity shares in the stock market and second you can choose the full-service broker who provides a wide range of trading and investing services. With discount brokers, you can avail the limited services, while with a full-service broker can get better options.