Choosing the right Broker for Trading or Investing!!

                Hello friends, welcome all again!

                In this blog we will discuss about which criterias to consider for choosing Broker! How really choosing a broker affect your profit and losses!
     
                 So first of all, you should know your trading style at least. Whether you are long term investor, short term investor, positional trader, day trader or scalper! And also, wether you are working with stocks, futures or options! Here we will discuss with the viewpoint around Indian brokers, but you can correlate with any country brokers. For investors and positional Traders, brokerage and charges and all that stuff doesn't really matter much, they should always go for good service and standard brokers.

                 

                  While choosing a broker, you should know about broker's charges first, like account opening charges, maintenance charges, any other hidden charges etc. If you are a investor or positional trader, you should ask about delivery charges and demat charges to maintain stock in your demat account. If you are day trader or scalper, you should ask about intraday brokerage amount. This is basic things to know.

                  
                  Other thing you should know is, wether there are any charges if you call them to execute your trade. Some brokers charge some amount to auto square off your intraday trades at market closing. The other charges are on transfer of funds from your trading account to your bank account and vice versa.

                   
                   For future and option (F&O) trading, you should ask wether they charge brokerage on "per lot" or "per trade". Trust me guys, this is most important thing to ask, which will affect your P&L drastically. For example, if we talk about Nifty F&O, the lot size is 75 (means if you are buying 1 lot= you are buying 75 quantity)[lot size is different for different instruments like Bank Nifty 1 lot is 40 quantity, Reliance 1 lot is of 1000 quantity etc]and you want to trade 10 lots(means 75*10=750 quantity) of Nifty. Now suppose your broker is charging you 20 rupees "per lot", then your brokerage will be 20*10(number of lots) = 200 rupees. Whether you make profit or loss in trade, 200 rupees goes to your broker, & if broker is charging you 20 rupees "per trade", then "lot size" (in our example 10 lots) doesn't matter, the brokerage will be 20 rupees only, irrespective of you working with 1 lot, 10 lots or 100 lots; [Guys, here's one catch, per trade means you should buy or sell 10 lots in one shot only, then and then it is considered as 1 trade, if you are buying 5 lots now and 5 lots after some time then it will be considered as 2 trades and your brokerage will be 2*20(brokerage per trade)=40 rupees and so on as per number of trades you execute, so in this way lot size doesn't matter in brokerage per trade]. There is one more thing to know also is, if brokerage is 20 rupees(per lot or per trade) you have to consider it to 40 rupees, because brokerage will be on buying and selling both, so if you are buying something for 20 rupees brokerage, you have to sell it also intraday or after some days, so brokerage will be on both sides.( 20 on buying + 20 on selling). On selling side also same rules apply of "per lot" or "per trade", which you should calculate yourself.

                       
                    Some brokers charge for intraday different amount and delivery based different amount. Like 20 rupees intraday brokerage and 40 rupees delivery based brokerage [you should understand this as 40 and 80 rupees respectively as rule of buying brokerage(20 or 40)+selling brokerage(20 or 40)].

                     
                      There's one other thing to know also, and that is services they provide. Many standard brokers' charges will not be that low, but they win in services they offer to you. Like some low brokerage firms will not be able to provide you good trading platforms, customer care service may not be that satisfying etc. So you should know your requirement first in this area, low brokerage or good service! If you are trading yourself via internet and your volumes are much higher and you trade very frequently, then I would suggest you to go with the discount brokers. You should also know wether they provide trading platform for PC as well as for Mobile phones or not (some brokers only have trading platform for Android phones, so iPhone and Windows phone users should ask whether they have iOS or Windows app for trading or not also). Nowadays Algo trading (automatic trading or robo trading) is also talk of the town, so if you are into it, you should ask wether they provide that service or not also.

                    
                     And in last, always open your account with SEBI registered and approved Broker only (for India). These same points applies in commodity as well as currency and crypto trading also.

                  
                     So guys, I hope this basic info is helpful to you in choosing right Broker for yourself. I have tried to keep it as simple as possible. You can read my previous blogs here for new people to trading. "Things to know as beginner in stock market" and "Mistakes of Novice Traders in Stock Market"

                    You can comment below your questions or suggestions on which topic you want me to write a next blog etc. Till then see ya all!!