Broker selection

Generally many traders/ investors are confused about broker selection.

Brokers having two categories.

Full service brokers.

Discount brokers

Full service brokers are those who provide you all service into trading , investing. like he mail you early in the morning a report which contains last day’s FII, DII data, world market trend, crude, USDINR data,investment picks, trading calls for the day & bla bla bla… Full service brokers provide you a terminal on which you can see charts.he provide you some exposer for trading. But his brokerage slab is expensive, this is the one painful thing, which causes clients run off after some duration of trading, & the client start trading with discount broker.

Discount brokers are those who generally provide you semi-algo terminal like nest, or similar next generation software. But discount broker don’t send/mail you any financial awareness report which might increase your knowledge. most of discount broker don’t provide IPO service. they have high pledging charges.BUT they apply you very very low brokerage taxes compared to full service broker.

So which is best?

if you don’t need any help in market research , having good intraday strategy, enough trading capital then discount broker can be better choice. but if you want to trade on exposer derived from pledging your holding then discount broker might not be good choice. discount broker provide you cover/bracket order which are very useful in intraday trading as you can place 3 orders without paying extra margin. discount brokers compulsory sqare off your holding before market close.but full service broker can give you some time to pay cheque or BTST facility without paying extra margin (its depend upon your relation on broker & his flexibility). Full service broker & his dealers call you when your position is in profit/loss, as they are monitoring all clients position, this is a good advantage if you are not always in front of screen. All in all both are good, the main point is that what are your requirement?

As per my opinion, high or low brokerage is not any issue or don’t affect on your balance, if you have good trading strategy.i have seen many traders, who previously blamed to full service broker due to high charges they have lost money. And even shifted to discount broker, they are still losing money! Reason? because they stopped learning, analyzing & started overtrading as their brokerage is now almost zero. so they buy & sell continuously within some small points. overtrading is the weapon which kills the knowledge of traders. So i say trade less but perfect! enjoy!

Happy Trading!

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