While trading, stock traders need to have a laser-like focus on the trade. And the last thing they want is technical distractions from the trading platform or worry about the brokerage. So selecting a good stockbroker from the very beginning of their trading career becomes essential. So in this article, we are going to talk in-depth about the best stock broker for beginners here in India.
Due to the lack of information or wrong information, many aspiring and enthusiastic traders end up selecting the wrong broker, to begin with. In the end, they not only pay a very hefty brokerage for all the executed trades, sometimes they become the victim of blatant cheating in the broking industry. So here, we are going to talk about two brokers beginner traders in India can use to not only save brokerage but also have peace of mind, that they will not be cheated of their hard-earned money.
Trading Platform also serves an important role when you are trading. So, having a good platform that is reliable and consistent, is what every trader wants.
Choosing a stockbroker and a trading platform that can handle high trading volume during peak trading hour or special days like Budget Day or Company Result Day is essential.
We are going to focus on 5 major points to evaluate the brokers. And here is the list of all points we are going to focus on.
1. Reputation of the Broker
The reputation of the broker you are going to use matters a lot. Good reputation in the market is hard to come by, and businesses know the importance of “Word-of-mouth” marketing. So a good broker will not destroy its reputation by trying to dupe the client.
Reputation for any institution or organization doesn’t come overnight. It had to be earned by hard work and dedication. It takes a very long time to develop a good reputation and even longer for a stockbroker.
So a stockbroker with a good reputation means it has been in the market for a very long time, and as an added bonus, the broker has seen multiple market cycle. Thus the broker can guide its clients with the experience it has gained over time.
And brokers who have been in the industry for a long time know that it is far more costly to acquire new clients than keeping an old one. So if you invest or trade in the stock market via a reputed broker, you can be sure that you will not be cheated by the broker.
2. Past Performance of the Broker
This metric is a bit tricky.
First of all, what do we mean by Past Performance of the Broker?
You can judge the performance of a broker by knowing how they treat their clients, did they try to dupe their customers, if it is a full-service broker, then how good their stock recommendation performed in the past, etc.
You cannot find the past performance of different brokers on a candlestick chart like that of a stock or a mutual fund. To find out how a broker has performed over the years, you need to roam around different internet forums a bit. You need to listen to the experience of users.
Reading multiple reviews of a broker will also give you an idea about the broker.
This kind of research is known as “Qualitative Analysis” in the financial market. You are trying to judge an aspect of a business which cannot be quantified with numbers.
3. Brokerages Charged by the Broker
A big chunk of money that you will pay as a trader will be in the form of brokerage. So selecting a broker which charges a reasonable amount of brokerage is obvious.
But selecting a broker which charges the lowest isn’t always wise. You have to find a balance between Service and Brokerage.
Many brokers in the industry promise ZERO BROKERAGE, but they take away thousands of rupees in other forms of hidden charges. So you should be careful before you fall for those ZERO BROKERAGE offers. Always remember that there is no such thing as “free lunch” in this world.
Selecting the cheapest stock broker in India and going with it might do more harm than good.
Most of the discount brokers in India charges a flat Rs. 20/- brokerage for each executed trades. If you are familiar with the basics of trading in the stock market then you should use a discount broker.
Full-service brokers provide a variety of services but at the cost of a little bit more brokerage. We at Money Premier would not recommend full-service brokers to beginners because for a simple reason – Interaction.
Some full-service brokers (not all of them) will try to up-sell novice traders and investors in the name of “providing services”. So, the less you interact with the broker, the less unnecessary financial service you will buy from the broker.
Some of the full-service brokers even sell services like helping you to open a bank account. Yes, a simple bank account.
But most of the reputed full-service broker like Sharekhan do provide good service to their clients at a reasonable cost.
And by interaction, we don’t mean Customer Care Service. All kind of brokers, be it a full-service broker or a discount broker, does have a helpful customer care service.
4. Types of Order Supported by the Broker
There are different kinds of orders designed to serve different purpose. Each kind of order has its own specific job.
Most of your investment orders like Cash and Carry, BTST (Buy Today Sell Tomorrow), where you buy the shares paying the full price, can be handled by a Simple Order.
In a Simple Order, you set the number of shares you want to buy, whether you want to buy at the market price or your preferred price, whether you want to buy it just for the day or you want to take delivery of the shares, and some other variables like Disclosed Quantity and Validity of the orders.
Any broker who serves pan India have some kind of Simple Order.
But if you want to trade in the stock market, especially Intraday Trading, then there are two orders you need to look out for.
- Cover Order (also known as CO)
- One Cancels the Other Order (also known as OCO)
Both CO and OCO are known as Complex Orders and not all brokers will support such kind of Complex Orders. First, let us talk about Cover Order.
A single Cover Order contains 2 orders or legs. One is for initiating the trader and the other one is a Stoploss Order.
In a Cover Order, first, you need to specify the details of starting your trader. Like whether you want to buy the shares (also known as going long) or sell the shares (also known as going short), how many shares you want to trade with, at what price you want to enter the trade, etc.
The 2nd leg of the Cover Order is for Stoploss. In the 2nd leg of the Cover Order, you specify how much loss you are ready to incur if the trade goes south. Think of it as a safety net for your capital, so you limit the loss of capital involved in the trade.
Next comes OCO.
A single OCO Order contains 3 orders or legs. Like Cover Order, OCO Order has both Trade Initiation Leg and a Stoploss Leg, but it also contains a Trade Completion or Square Off Leg. You can think of an OCO Order as a single order containing all the details from starting your trade to finishing it.
The Square Off Leg of the OCO Order contain details at which you want to book your profit.
When you place a OCO Order through your broker, first the Trade Initiation Leg is sent to the exchange. After the 1st leg gets executed, the other 2 orders are sent to the exchange.
Now, as the name suggests, One Cancels the Other. If the price hits the Square-Off Leg’s limit first, then the Trade Completion Leg is executed and the Stoploss Leg is cancelled. And if the price hits the Stoploss Leg’s limit first, then the Stoploss Leg is executed the Trade Completion Leg is cancelled.
All of these happens automatically and you just need to enter all the details at the beginning of the trade and you are good to go.
As you can see, both CO and OCO Order are very useful for traders and come in very handy when you are placing complex trading orders. So the broker you choose to trade with should support both CO and OCO Orders.
5. Trading Platform Provided by the Broker
The Trading Platform provided by the broker is one of the most important aspects a trader should look for while choosing a broker.
The Trading Platform, be it a Web-Based or a Standalone Application, should have an Easy-to-Use Interface. The fewer clicks you have to use to finalize your trades, the faster your trades will be. So all the important functions like Margin Calculation, Funds Available, Market Depth, etc must be easily accessible.
In the modern-day and age, every kind of service has some kind of Smartphone App, then why should stock broking be left behind. We at Money Premier, are a bit hesitant with the idea of trading stocks with your Smartphone, but it is what it is.
The Mobile Trading App of the broker should be lite on the CPU and Memory of the phone. It should have fast response time. And most importantly easy to navigate.
Placing your Delivery Order through the Mobile Trading App is somewhat OK, but we will suggest not to actively trade stocks via the Smartphone App.
Which is the Best Stock Broker for Beginners in India?
Coming to main question – Which is the Best Stock Broker for Beginners.
Well, there is no point in choosing a full-service broker if you just want to Trade in the stock market. You can choose a full-service broker like Sharekhan if you want to both Trade and Invest in the stock market.
All that remains are Discount Brokers. Now, there are many Discount Brokers actively serving the Indian Stock Trading Market. Among those, there are 2 Discount Brokers which we will recommend.
Both Upstox and Espresso ticks every point we have discussed above.
Upstox has a very strong market reputation and that is why the broker has one of the largest client bases in India. When a name like Ratan Tata is involved in a company, then you know the company will maintain a certain standard.
Upstox is not a year-old broking house. Upstox has been serving the Indian market since May of 2011. So if the past performance of the broker would have not been up to the mark, then it wouldn’t have survived in such a competitive, cut-throat market.
Though Espresso itself might be a new company, the parent company the broker originated from, that is Sharekhan, has been serving the Indian Stock Market Community for multiple decades. So Espresso has adequate experience and idea about the Indian Stock Market.
Upstox Charge a flat Rs. 20/- per leg of the order. So a complete intraday trade will cost you Rs. 40/- in brokerage. It is the same with Espresso from Sharekhan. Espresso also charge a flat Rs. 20/- per leg of the trade.
But Espresso trumps not only Upstox but every other Discount Brokers in India in the case of Brokerage.
Espresso has developed a brokerage model called “Pay When You Profit – PWYP“.
Espresso will not charge a single paisa of brokerage if your trade doesn’t end up making a profit for you. If your trade goes south, you don’t have to pay a single penny of brokerage to Espresso.
We have discussed in detail every aspect of both Upstox and Espresso by Sharekhan. Take your time and give it a read. You will find solutions to a lot of your unanswered questions.
Delivery Trades will cost you ZERO RUPEES in brokerage. Both Upstox and Espresso doesn’t charge any brokerage on Delivery Trades. Delivery Trades are FREE in both Upstox and Espresso.
Both Upstox and Espresso support Simple Order and all kinds of Complex Orders, which a trader will need to execute their trade successfully.
Upstox provides a robust Web-Based Trading Platform called Upstox Pro which will handle most of your trading requirements. They also have a Desktop Based Trading Platform that is rarely used by their clients, which proves how efficient the Web-Based Platform of Upstox is.
The Mobile Trading Platform of Upstox is one of the highest-rated trading apps in both iOS and Android app stores.
Espresso also provides a Web-Based Trading Platform. But if you have used Sharekhan as a broker, then you know how powerful the Desktop Based Trading Platform Trade Tiger of Sharekhan is. Espresso has re-developed it further and made an even more powerful and easy-to-use platform called BINGE.
Both Upstox and Espresso have continuously developed there Mobile Trading App according to the need of their clients. The respective apps of both Upstox and Espresso receive regular updates depending on the demands and needs of their users. We can say that both the brokers developed their Mobile Trading App keeping their users in mind.
This was just the gist of both of the brokers. Both Upstox and Espresso contain even more features, functionality and support for the clients. This article would have turned into a research paper if we would have even tried to list all of them.
We would say try the broker for yourself and see which broker fits your needs. Most of the time the brokers doesn’t charge any money for opening an account, even if they charge an account opening fee, it is very nominal.
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After reading this whole “Best Stock Broker for Beginners” article, if you still have any question or query, do ask us in the comment section below. We will definitely try to answer it.
In the end, we will say – Good Luck and Happy Trading! 😊
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