How to choose a best broker for demat & trading account?
Many people have growing interest to invest in equity ,mutual funds and other money market instruments. In one of my posts I discussed about demat account, which is very essential to manage your investments. Here I’m going to discuss some details about demat account.
Provider :
Demat account which acts as a storage of your securities is provided by the depositories. Depository is an organization which holds the securities. In India there are two depositories as (1) Central Depository Services (India) Limited (2) National Securities Depository Limited . There will be a Depository participant between the Depository the account holder who can be called as demat account provider. like India bulls , religare, India bulls etc., These intermediaries provide the demat account along with all the services associated with it. Before choosing a demat account provider one needs to check the following :
(1) Brokerage :
Along with demat account one also has to open a trading account to buy and sell the securities. It’s better to open the both with a same provider. Since Brokerage is the primary source of income to the brokers , they will fix the cost of Brokerage based on the frequency of your trading. This is the reason behind the brokers insist to trade as much as possible in different combination as said by you (if you don’t have much knowledge about trading). So if you are going to trade very frequently on regular basis then you can ask the provider to reduce the cost of Brokerage to you compared to the brokerage charged to those who doesn’t trade actively.
(2) Annual maintenance charges :
Some brokers separately charge certain amount as maintenance charges yearly. Before opening the account go and discuss about these charges with the provider.
(3) charges for trading tools :
Most of the providers have their own trading software to facilitate the account holder to buy and sell the securities on his own. Some providers charge for this separately, while the other don’t charge separately but include this cost in total package cost. So one should cautious enough to compare the charges of different providers and the ease of access to that software also should be examined.
(4) Background of the provider/brokers :
Before opening an account one needs to do something to know about the brokers.Their past experience and promoter’s history, error free performance etc should be enquired. This will help you avoid the problems in future. Recently SEBI has given some punishment to karvy a brokerage agency for indulging in some activities which are against the law. So be careful while selecting the brokers.
(5) Banks :
Now a days most of the banks are offering a three in one account (Bank account, demat account, trading account). So if you find the above parameters as best in a bank then you can open with them. Here are some reputed demat account and trading account providers in India :
(1) ICICI Direct(2) India Bulls.(3) HDFC securities(4) Angel broking(5) Kotak securities(6) SBI(7) Religare financial services(8) Reliance Money.
Know about Callable and non callable fixed depositsDifferent Types of Orders Placed in Stock MarketBSE Sensex an OverviewInsider TradingDifference between trading account and demat accountAll you have to know about gifting of shares Demat Account Various ways to minimize loss in share trading Mutual Funds: How to Buy and Sell
