Zerodha – The Best Discount Broker
In the earlier posts we have learned the basics of Option Trading. So, are you ready to start trading on the markets?. If yes, then it is the time to select the best broker Zerodha. I have given a fair Idea on different types of brokers and account types in my article “Start trading in Nifty Future and Options“. If you are a beginner, please read it first.
Are you a regular trader and worried about the high brokerage you are paying to your broker? Sometimes you might have faced the situation, even though you have made a good profit in a day, you are left with peanuts at the end of the day. Here the issue is not with you. Your current broker is the problem. At the end of the day broker makes money, irrespective of whether you have made profit or loss for the day. The result is almost same whether you are trading with ICICI Direct, HDFC, or IDBI.
The more painful experience you will have on the day where you have made a losing trade. End of the day when you are going through the trade book, you will be more distressed that over and above the losses you have made, you are supposed to pay a good amount in brokerage also. Is there any way to avoid such situations. The answer is Yes. Finally, the solution is to change the current broker if any, and open a new account with a discount broker.
Who is a discount broker?
There are a number of discount brokers in india. Zerodha, RSKV, SAS Online, SAMCO are a few among them. We know there are two types of brokers.
- Full service broker
- Discount broker
Who is full service broker ? there are brokers who offer you 3 in 1 accounts. Examples are ICICI direct, HDFC , IDBI, Kotak securities etc. They have their own banking business and they usually offer you a 3 in 1 account. It includes your Trading , D-mat and Savings account. You can transfer the margin money from your saving account to trading account with a single click . Since both the accounts are interlinked and from the same service provider, they can give it free of cost.
Discount brokers will provide you discount in transaction cost, but most of them will not offer you a savings accounts. It is your responsibility to transfer funds from your savings account to trading account using NEFT or cheque. Some times it takes time to credit the balance from a third party bank account to your trading account . But now a days the banking are online and you will not face much issue in this case.
For the last two years, I am using Zerodha for Trading and D-mat Service. Their service is very good. You can transfer margin to your trading account using NEFT/RTGS , IMPS or by cheque. I have never tried cheque payment, but it is better that you have an online savings account.
Advantage of Discount brokers.
So, let’s consider Zerodha as an example. They have unique plans
- Flat Rs. 20 for intra day equity and FNO trades
- Free equity delivery – No brokerage.
Yes, they have made investment procedure very simple. No brokerage for delivery trades. You will have to pay only STT and TT which is very nominal like Rs 10-15. But if you do the same transaction with any full service broker, you will be charged with not less than Rs. 200.
Zerodha offers flat Rs. 20 brokerage on intra-day trades. Unlike the other brokers they charge you Rs.20 per trade. You can trade one lot or thousand lots in a single transaction, but the brokerage is same. On an average you will pay around Rs.50 for a single trade in Zerodha. It is Rs.20 to buy and Rs. 20 to sell and adding taxes will cost you around Rs.50. So, If you have made a nominal Rs.300 from a trade, you can take home Rs.250. With other brokers you may may end up paying the entire profit or even more as brokerage.
Compare with Other Brokers
If you want to check how much would be the brokerage for your trades, you can check it with Zerodha Brokerage Calculator. You can check the margin requirement for all FNO script on BSE and NSE with the help of Zerodha Margin Calculator.
One of the major draw backs with the discount brokers are, their trading platforms are not user friendly. They usually use the same Customized version of NEST trading platform developed by Omnesys Technologies. The user interface looks dull and the menus are confusing. But Zerodha have developed their own trading platforms like
- Kite – Powerful web based trading platform
- Pi – More versatile Desktop application
- Kite – Android and IOS application
Among the above applications my favorite is Kite android. Its a feature rich application but with simple interface. I have never face any issue with any of the zerodha application even on high traffic days.
You can open an account with Zerodha here by clicking on the link and provide the basic details. Everything is done online even the KYC. No need to visit any branch office or arrange appointment with any executive. You can user you webcam and do the KYC at the convenience of your home or at your office.
So far we have gone through the merits and de-merits of full time brokers and the advantage of discounted broker over them. Full time brokers are a good choice if your trade frequency is less. And, you are ready to pay such high brokerage for the extra facilities like 3 in 1 account they provide. But as per my personal opinion Zerodha is your ideal trade partner. Finally, the choice is yours. If you trust the big brands only then stick with them , and if you are practical and trade the market in a smart way then switch to Zerodha.
Hope this article helped you to brush up your trading skills. Happy reading …