The prospect of high returns has always brought people to stock markets. But making money in equities is never a piece of cake. Along with research and an understanding of the market, it requires a lot of patience and discipline.
Below are a few key things customers look at while trading:
1. Trading costs
The trading cost includes brokerage, taxes, and margin funding costs. The brokerage is the largest among these. Savings in brokerage result in lower trading costs and higher profitability.
The monthly unlimited trading plans offer the maximum brokerage savings to the customers. In this plan, customers pay a flat monthly fee for an unlimited number of traders in a segment.
An intraday trader with an average of 20 trades a day and Rs 15 per trade brokerage pays Rs 6000 in brokerage in a month. The unlimited trading plans usually cost around Rs 899 a month and offer huge savings.
2. Tools for Research and Analysis
To remain profitable, a trader requires sophisticated trading tools for research and analysis. Tools like technical and fundamental analysis are critical for any trader. Advance charts, reports, and tax statements save time for customers.
3. Ease of Trade Online
The customer requires a simple user interface when trading online. It makes the trading faster, less confusing, and reduces errors.
In addition, simplified fund transfer, margin funding, pledging, online account opening, and modification make it easy to manage the account.
4. Risk Mitigation
Investing in the stock market is risky. A proper understanding of risk and regulation is required to mitigate the risk.
When investing in markets, it is important not to keep all your eggs in the same basket. Whether it's choosing between large-cap and mid-cap, or growth and income stocks, it is advisable to keep risk in check. Also with a little bit of research, you can start exploring advanced order types that limit your risk exposure to an extent.
These advanced order types are broadly classified into two categories – conditional orders imply that an order is to be filled at a certain trigger; while durational orders are executed under a specific time frame. Stop limit order, for example, has been a certain hit among customers – it allows to set a price range; a point where the order is to be triggered, and the limit price at which order will be executed. While there may be a drawback of missing the market movement, it limits the risk to a certain extent.
5. Customer Service
Trading in stocks is an interactive process. Ongoing communication between the broker and the customer is a must. While most trading platforms offer customer service via phone, email, online helpdesk, etc., it is important to check this before you shortlist the right trading partner for your investments.
Each trader, before making a decision, must carefully shortlist the right stocks and broker after understanding their expectations and exploring available options. The cost of trading, platform features, margin & leverage facility, customer service, and research empowerment, etc., are some of the key factors that must be explored. In a nutshell, selecting the right investment instrument, coupled with an empowered broker or trading platform is the key to your trading goals.
The author, SP Toshniwal, is founder and CEO at ProStocks. The views expressed are personal
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