The Best Stock Broker for Beginners in India Share Market

Published on Tuesday, February 9, 2016 by Chittorgarh.com Team | Modified on Sunday, August 9, 2020

Are you super excited about the fabulous returns you hear so much about in stock market and can't wait to try?

Slow Down... It's not that easy. You should understand the major risk and challenges associated with investing / trading in stock market. Let's start with challenges.

Challenges for Beginners when Investing or Trading in India Stock Market

Share market (stock market) is one of the popular investment option for many investors. At the same time it's most difficult. Here are some of the issues beginner's faces in stock market:

• Over Excitement

  Most beginners are over excited before entering in market. Investment bankers, relationship manager of financial institutions, brokers or even friends and relatives tells very positive stories to encourage newcomers. They shows reports with extraordinary annual returns, year on year. Some time in excitement of making quick money, investors see only positive side of the stock market.

  If this initial energy is used in learning and investing in small amount, it results in to long term gain.

  On other side, people who put money in stock market without understating its fundamental are basically gambling. In most cases they lose all their money in short span of 6 months.

• Steep learning curve

  Consider stock market as a complex game. To invest or trade in stock market you have to understand the basic rules of the game, parties involve, your rights and finally learn how to actually buy and sell stocks.

  Expect a steep learning curve in the beginning. If you cannot invest good amount of time in learning, stock market is not the place for you. Stock market investing also require close monitoring of every day news affair.

• Understand 'Type of Brokers'

  Based on the type of services they offers, brokers in India can be categorize into two categories i.e. Full-service broker and Discount brokers.

  Learn about type of brokers and how they are different from each other?

  Full-services broker offers many other services along with stock/commodity trading service. This include banking, insurance, loans, margin funding, investment advisory etc. You can call them one-stop-shop for your investments.

  Discount broker focuses on brokerage business. They are specialized in one core area. Their charges are significantly less in comparison with full-service brokers.

• Choosing right broker

  To trade stocks or commodities in an exchange, you should have an account with a stock/commodity broker (i.e. Sharekhan, Angel One, Zerodha). Broker charge a fee for their service which differs significantly from broker to broker. Also the services offered by broker varies by customer to customer. It's is like choosing a bank to open an account. It's very important to choose right broker to trade/invest with. We will talk about this in detail in later section of the article.

• High risk investment category

  Risk is the fundamental of any investment. Stock market is among the high risk investment options available. Extra care is needed when investing in stock market.

  At first sight, stock market looks very attractive in terms of making huge profits. But like any other investment option, share market is not the place to make easy money. Truth is, only a small number of people which high risk apatite and good knowledge of the market makes money.

Choosing the best stock broker

Are you looking for best trading account for beginners in India?

Each investor is different. They have different goals and objectives, different risk apatite, different amount of money to invest, different amount of time they can spend on trading and different choice of using tools for trading (i.e. website, mobile etc.).

That's the reason there is no 'one size fits all' account with brokers. You would be surprise to know that there are over 5000+ brokers in India offering brokerage services to the customers. We are not talking about sub-brokers, authorized persons, branches and franchises, which are in tens of thousands. Yes, that's a huge number and choosing one of them which fits you requirement is not easy.

Why choosing broker is so difficult?

1. There are thousands of brokers in India. Over 100 brokers are well known with well-known brand and network of branches around the country.
2. Brokers offer variety of services. You may not need all of them. i.e. You may not need home loan or an insurance policy from a stock broker.
3. Broker changes in different way. Some brokers charges on % basis, i.e. 0.5% brokerage on trade, while other charges flat Rs 20 per trade. Charges are different by 60%-80%.
4. Not every brokers offers hand holding for new stock market investors.
5. Not every broker offer tips and recommendations.
6. Only few brokers offer trading services for NRI customers.
8. Brokers offer different trading tools and have different charges.

Which are the best Stock Broker for 'Beginners' in India Share Market?

Key factors to consider for beginners:

1. Broker who can direct your initial 'high energy and excitement' towards learning.
2. Broker who can help you understand the market and risks associated with it.
3. Broker who discuss the various investment options available in stock market including Stocks, Mutual Funds, ETF's, Derivatives (F&O), Bonds, NCD's, IPO's etc. Broker who can help you chooing the right investment/trading option for you.
4. Broker who can make the transactions between bank account, trading account and demat account easy.
5. Broker who charges reasonable fees.
6. Broker who is available locally in your town in case you need in-person help.

Best Brokers for Beginners

1. Your own Bank for 3-in-1 Account

   Most banks in India offers brokerage services. If you have an account with a bank which offers the trading account, go for it.

   It is extremely convenient to work with the same bank you have trust in. The transactions between your bank account, demat account and trading account are seamless.

   The only challenge is; they are expensive in terms of brokerage and fees they charge.

   You can find more detail about 3-in-1 account at The Best 3-in-1 Trading Account in India Stock Market - ICICI, HDFC, SBI, Kotak

2. Sharekhan

   Sharekhan is among the top 5 stock brokers in India and provide training and tools especially for beginners in stock market. Their classroom training, hand holding in the beginning through a dedicated relationship manager and availability of branch office in almost every corner helps you to quickly learn and get up to the speed.

   There charges are lower than 3-in-1 accounts offered by Banks. They charge brokerage based on % of the transaction (0.05% brokerage). They also have prepaid plans (cheaper than usual % based charges) available for frequent traders.