How to choose a better stock-broker!!

Its very easy to see stock quotes on TV/newspaper, but when it comes to investing and choosing a stock broker most persons find themselves in the condition of indecision. It’s true that whenever there is involvement of money there arise some or other kind of disputes. Let us see what factors must be taken into account while choosing a stock broker/sub broker.

>

1. First and most important thing that must be taken into consideration is the repute of the broker/sub broker with traders trading there. For this, one should go by the time of end session on a trading day and try to meet the existing traders to know the repute of the broker/sub broker. One must assure that he/she meets at least 4-6 persons at different times so as to know the actual status.

>

2. After scrutinizing short-listing a few of them, one must go and meet the branch in-charge, in person and must discuss the trading terms. Following things must be discussed:

(a) One should know the brokerage structure separately for equity, futures and options. Many times these are not told and when it comes to charging for options a differential pricing is opted and customers thus have to pay more. Try to make the option brokerage on a flat per trade basis rather than % basis, this way you are assured that you are only charged what you have opted for.

(b) One should know the no. of disputes occurring at the branch, time taken and procedure to handle the disputes. Try to meet traders of a broker/sub broker when there is big fall in the market, generally more disputes take place nearby these trading days. Most common disputes relate to margin shortfall, selling pool/base capital a/c shares without information, squaring up a future/option position without intimation.

(c) One should know, in how many days after settlement day the shares are transferred to dmat a/c, many sub brokers don’t transfer shares unless intimated which is against law unless specified by client in written. By not transferring shares they have upper hand in case of any dispute.

(d) Always know the payment terms. How much leverage is available that is how much delay is acceptable and take that in written so that no dispute arise in future.

(e) One should enquire what other facilities a sub broker/branch is providing for example market updates by sms, follow up on trades, trading calls by sms and so on.

(f) Know in advance what are the power and other back up facilities at theirs’. Many a times a person opens a/c at a sub broker in the vicinity for the sake of ease of distance but he may not be having adequate power back ups, which might result in loss for clients in case electricity cuts for few hrs. Also try to know the vsat/server disconnections occurring during trading hours, initially I joined a broker which was good as such but there were server based disconnections many a times resulting in frustrations in the minds of clients which have open positions.

(g) Know in advance what are payment options and how many days it takes to have payments, try to opt for online payments that are generally done the same day.

(h) Try to know what are the measure taken in case of a dispute occurring related to a trade, for example you asked the dealer to enter the trade to buy a call option but he takes put option or say if you asked him to buy but he sold, ask how these disputes are handled, in case of phone based orders whether he has adequate facility to record the phone based trades in case of any trade disputes.

>

3. Try to find out the repute of the broker by searching on the net, there aremany forums where such topics are discussed, try to find out the comparison and rating of various brokers.

>

4. Go and have a look at the trading hall and other facilities at the premise ofBroker/sub broker.

> Now, after collecting data for the short listed ones, take the informed decision to open an a/c with broker/sub broker. Remember I am using the term “better” as there can be disputes at any point not discussed. Be a better day trader now.