How to apply for an IPO with Zerodha Account cover

How to apply for an IPO with Zerodha Account?

In this article, you’ll find out the exact process to apply for an IPO with Zerodha account. However, before we begin, let me tell you my experience of applying to an IPO’s through Zerodha Account.

I’ve been using Zerodha for over four years now and been a happy customer. This discount broker has helped me save a lot of un-necessary brokerage charges if I had used any other full-service broker instead.

Anyways, there was one ‘cons’ of using Zerodha as a broker which bugged me in the past. And it was not having the facility for the customers to directly invest in Initial public offerings (IPOs) through the Zerodha dashboard.

Prior to this recently launched facility, the Zerodha customers have to use ASBA (Application Supported by blocked account) on their net banking portal to apply for IPOs. However, this was not a simple one-click process unlike what most of the other traditional big brokers like ICICI direct, HDFC sec, etc offered.

Although I am not a regular investor in IPO’s and only invest if I find the new offer a lot appealing. Nonetheless, having a simple process to invest gives flexibility whenever the opportunity arrives. Nonetheless, investors can apply for IPO’s directly within Zerodha console. And the best part is that the process is really simple.

Before you apply for an IPO:

Obviously, you’ll need a Zerodha account if you want to apply to IPO’s with Zerodha. If you haven’t opened your account with Zerodha yet, here’s a detailed blog post on how to open your Zerodha Demat and trading account. Else, you can use this direct link to open your account.

Next, you need is a UPI account. And this is nothing new. These days everyone uses UPI to make fast and secure payments. For example, you can use apps like Phonepe, Bhip app, iMobile by ICICI, etc. Here is the link to the UPI apps and banks that allow IPO payment.

Also read: Zerodha Review –Discount Broker in India | Brokerage, Trading Platform & More

Steps to apply for an IPO with Zerodha Account:

1. Login to Zerodha Console. Here’s the quick link.

2. On the top menu bar, go to Portfolio → IPO.

3. On this page, you can find the list of the active IPO’s.

1 apply for an IPO with Zerodha Account zerodha console

4. Select the IPO that you wish to apply from the list of active IPOs and click on ‘Place bid’.

5. A pop-up screen will launch with IPO information. Here you can find details like issue date, issue price, market lot, discount (if any), minimum order quantity, etc.

2 apply for an IPO with Zerodha Account ipo details

6. Next, enter your UPI id. Make sure to select the correct bank account.

3 apply for an IPO with Zerodha Account upi accounts

7. Place your bid by entering the ‘Quantity’ and ‘Bid price’.

For the quantity, it should be minimum order quantity or the multiple of the lot size. For the ‘bid price’ you can enter any price between the offered issue price range. Anyways, for the maximum chances to get an allotment, it is recommended to use the ‘Cut-off’ price.

6 apply for an IPO with Zerodha Account upi mandate

8. After filling the details, click on the ‘checkbox’ stating that you’ve read the prospectus and you’re are an eligible UPI bidder as per the applicable provisions of the SEBI.

9. Finally, recheck the details and click on ‘Submit’.

10. Besides, if you want to make any changes if the bidding later, simply click on ‘Bid details’ on the IPO page and make the changes.

8 apply for an IPO with Zerodha Account delete order

Once submitted, you’ll receive the request to complete the “UPI Mandate” on your UPI app.

Please note that sometimes it may take a few hours to receive the UPI mandate request. Anyways, in my case, it was instantaneous and I received payment request on my imobile ICICI app as soon as I submitted the application on the Zerodha Console. Accept the request once you receive it to complete the process.

6 apply for an IPO with Zerodha Account upi mandate

On accepting the payment request, your UPI app will block the IPO funds in your bank account till the date of allotment. You’ll receive an SMS from exchange once your application is placed successfully.

If you’re allotted the IPO shares, the amount will get debited from your account and shares will be credited in your demat account. On the contrary, if shares are not allotted, then blocked funds are released on the date of the payment. You can read more about the process of IPO share allotment to retail investors here.

That’s all. This is the exact step-by-step process to apply for an IPO with Zerodha Account.

Closing Thoughts:

Zerodha is continuously innovating to provide a better investing and trading facility to its customer. The procedure to apply for IPO is a lot simpler now. You should definitely check it out. Further, comment below if you face any difficulty in applying for IPO using Zerodha account. Happy Investing!

Zerodha Review –Discount Broker in India | Brokerage, Trading Platform & More

Zerodha Review –Discount Broker in India | Brokerage, Trading Platform & More

Zerodha Review– Brokerage, Trading Platform & More (Updated Sept 2019)

Zerodha is the biggest discount broker in India and perfect for traders & investors looking for low brokerage, easy interface, and reliable trading platform.

Zerodha offers a zero brokerage for delivery equity & direct mutual fund investments. For all intraday, F&O, currency, and commodity trades across NSE, BSE, MCX, it offers a brokerage of Flat ₹20 irrespective of the trading volume. Therefore, you can save a lot of brokerage charges on your trades using Zerodha as your broker.

In this Zerodha review, we will discuss the brokerage charges, account opening charges, maintenance charges, trading platforms, products, my personal experience of using Zerodha & more. Here are the contents that we’ll cover in this post:

Table of Content

  1. Introduction
  2. Zerodha Brokerage Charges
  3. Zerodha Account Opening Charges & AMC
  4. Zerodha Products & Features
  5. Pros and cons of Zerodha Discount broker
  6. My experience of using Zerodha
  7. How to open your trading & demat account with Zerodha?
  8. Closing Thoughts 

By the end of this post, you’ll have a complete understanding of Zerodha trading services and whether this broker is right for you or not. Let’s get started.

Quick Start: Click here to open your account with Zerodha!

Zerodha Review –Brokerage, Trading Platform & More

1. Introduction

There are two types of stock brokers in India. Full-Service brokers and Discount brokers. The full-service brokers offer a trading platform along with advisory. However, their brokerage charges are high. A few major full-service brokers in India are HDFC Securities, ICICI Direct, Motilal Oswal, etc.

On the other hand, discount brokers offer trading platforms with minimum brokerage charges. Nonetheless, they do not provide advisory services. The biggest advantage of a discount broker is that it saves a lot of brokerages for the traders/investors. On all other prospects, like performance, computerized trading systems etc- both offer similar facilities.

An important point to know here is that all the brokers- Full service or discount brokers are licensed and regulated in India by regulating bodies like SEBI.

Zerodha is a leading discount broker in India in terms of daily trading volume, growth and customer base. It is one of the most technologically advanced and cheap stockbrokers. Zerodha has over +1 million clients and contributes to over 10% of daily retail trading volumes across NSE, BSE, MCX.

Ironically, the term ‘Zerodha’ is derived from the fusion of an English and Sanskrit word. ‘Zero’+’Rodha’ where ‘Rodha’ means barrier. Overall, Zerodha means ‘Zero Barrier’.

It was started by Nitin Kamath, an Engineer by qualification, in 2010. Nithin bootstrapped and founded Zerodha in 2010 to overcome the hurdles he faced during his decade long stint as a trader. He was named one of the “Top 10 Businessmen to Watch Out for in 2016 in India” by The Economic Times for pioneering and scaling discount broking in India. Here are a few of the famous awards won by Zerodha recently:

— National Stock Exchange (NSE) “Retail brokerage of the year 2019” (& 2018)

— Outlook Money “Retail broker of the year 2017”

— Ernst & Young “Entrepreneur of the year (Startup) 2017”

2. Zerodha Brokerage Charges 

Zerodha offers trading services to buy and sell stocks, futures & options in equities, commodities, and currency segment. Here are the Zerodha brokerage charges:

– Free equity delivery

All your equity delivery investments (NSE, BSE), absolutely free — ₹0 brokerage.

– ₹20 intraday equity and F&O trades

₹20 or 0.01% (whichever is lower) per executed order on intraday trades across equity, currency, and commodity trades across NSE, BSE, and MCX.

Type Brokerage Charges
Equity Delivery Rs. 0 (FREE)
Equity Intraday Lower of Rs. 20 per executed order or 0.01%
Equity Futures Lower of Rs. 20 per executed order or 0.01%
Equity Options Lower of Rs. 20 per executed order or 0.01%
Currency F&O Lower of Rs. 20 per executed order or 0.01%
Commodity Lower of Rs. 20 per executed order or 0.01%

Quick note:

1. You can use this Zerodha Brokerage Calculator to get more idea.

2. Apart from brokerages, there are also a few other charges that you have to pay on your transactions like transaction charge, STT, SEBI turnover charges, Stamp duty, GST, etc. You can have read this blog post to understand the different charges while trading in stocks.

3. Zerodha Account Opening Charges & AMC

Here are the account opening charges for Zerodha

  1. Equity Trading Account: ₹300
  2. Commodity Account:₹200

If you want to trade in both equity and commodity, then you need to pay an account opening charge of Rs 300+Rs 200 = Rs 500. Anyways, if you are just interested in trading in stocks i.e. equities, you can open demat and trading for equity account at Rs 300. The demat account annual maintenance (AMC) charge is Rs 300 per year.

 4. Zerodha Products & Features

 Zerodha has built its own trading applications for the customers. It offers different trading terminals, websites, and mobile apps (Android/iOS) which are free for the customers.

— Kite 3.0

zerodha kite dashboard

Kite 3.0 is a modern technology-based trading platform with streaming market data, advanced charts, an elegant UI, and more. It is a minimalistic, intuitive, responsive, light, yet powerful web and mobile trading application offered by Zerodha. Kite provides Bandwidth consumption of fewer than 0.5 Kbps for a full market watch, extensive charting with over 100 indicators and 6 chart types, advanced order types like Brackets and cover, millisecond order placements, and more.

Overall, Kite provides an excellent experience to the users through its groundbreaking innovations presented with hassle-free usability.

— Kite mobile

zerodha mobile app

This is a mobile version of KITE for a seamless experience for mobile-users and available in both Android and iOS devices.

— Coin

Zerodha Coin is a platform that lets you buy mutual funds online directly from asset management companies. This platform is absolutely free since August 24, 2018. Here, you can make your investments without any commissions.

With the help of Zerodha Coin, you can have Direct mutual funds in DEMAT form, with the convenience of one portfolio across equity, MF, currency, etc. Moreover, it also provides a Single capital gain statement, P&L visualizations, and more. This Coin by Zerodha has made investments through SIPs really simple and flexible.

Other Partner Products

Apart from the above products, Zerodha also offers a few other partner programs:

  1. Smallcase: This thematic investment platform is powered by Kite Connect APIs. Smallcase helps users to invest in different themes by intelligently providing weighted baskets of stocks in each theme.
  2. Sensibull: This is an options trading platform which offers simplified options trading for new investors by providing powerful trading tools. Sensibull aims to make options trading safe, accessible, and most importantly, profitable for all.

Besides, Zerodha has also started a few educational initiatives to improve financial literacy and increase the participation of the common people in the financial world. Here are a few other products offered by Zerodha

  1. Zerodha Varsity: An educational platform to educate people about investing and trading. Zerodha Varsity offers free modules on Technical analysis, fundamental analysis, futures, options, risk management, trading psychology & more. Recently, Zerodha Varsity also launched its Varsity mobile app.
  2. Trading Q&A: An online forum powered by Zerodha to answer people’s most troublesome investing and trading questions.

 5. Pros and cons of Zerodha Discount broker

Here are a few advantages and disadvantages of using Zerodha trading platforms:

Pros:

  1. Zero Brokerage Charges for Delivery
  2. Flat Charge for Intraday (Rs 20 or 0.01% whichever is lower per executed order for everything else)
  3. Same pricing for across all exchanges
  4. No upfront fee or turnover commitment
  5. Z-Connect, interactive blog, and portal for all your queries
  6. Trading, charting, and analysis, all rolled into one next-generation desktop platform Pi.
  7. Minimalistic, intuitive, responsive web-based trading platform Kite
  8. No minimum balance required to open Zerodha trading account

Cons:

  1. 3-in-1 account (Saving+Demat+Trading) not available.
  2. Online IPO investment not available. Now, Zerodha customers can invest in IPO’s through UPI payment. Read more about Zerodha IPO applying process here.

Note: Zerodha has recently started offering Zerodha IDFC FIRST Bank 3-in-1 account. However, to open a 3in1 account at Zerodha, you need to have an existing account with IDFC FIRST Bank. Accounts can only be opened online. Read more here.

 6. My experience of using Zerodha

It’s been around three years since I’m using Zerodha and I’m satisfied with the trading services provided by Zerodha.

Initially, I started with ICICI direct as my broker, but later I switched to Zerodha when I realized that I was paying way too much brokerages for my trading transactions. I wished I had switched to discount broker earlier as it could have saved me a lot of ‘unnecessary’ brokerages and trading experience is almost similar. Although I still hold both the accounts, I rarely use ICICI direct account to buy stocks now, but rather use Zerodha for making my stock investments.

 7. How to open your trading & demat account with Zerodha?

Opening a demat and trading account with Zerodha is really fast and hassle-free. In fact, if you’ve all the documents, you can open your account and start trading within an hour.

Here are the documents required to open a demat and trading account at Zerodha: PAN CARD, Aadhar Card, 2 Passport size photos, Canceled cheque/ Saving bank account passbook. I will recommend keeping photocopies of all these documents ready before you apply for opening the accounts.

To open your trading & demat account at Zerodha, go to Zerodha website and click on ‘OPEN AN ACCOUNT’. Here is the direct link.

open demat at trading account at 5paisa

Note: You can find the detailed explanation on how to open your demat and trading account at Zerodha here.

8. Closing Thoughts

In the past decade, Zerodha has earned trust and respect among the trading population by providing reliable and technologically advanced trading services. It is definitely the largest discount broker in India. If you are looking to open your brokerage account with a reputable brand which offers low brokerages, and have a fast trading platform, Zerodha is definitely one of the best options.

That’s all for this post. I hope this Zerodha review is useful to you. If you have any additional query regarding Zerodha or if you want to share your review of Zerodha, you can post it in our forum. I’ll be happy to answer your questions. Have a great day!

zerodha kite

Zerodha Product Codes Explained- CNC, MIS, SL & More.

Zerodha Product Codes Explained- CNC, MIS, SL & More

Hi Investors. For the last couple of weeks, I have been getting a number of messages and comments to explain the different product codes that are used in Zerodha marketplace.

Zerodha is one of the biggest discount brokers in India and it has over 5+ lakh clients. The different zerodha product codes will be simple to use once you understand it. So let’s get started.

Here is a screenshot of the KITE app. Please note the different zerodha product codes. The two easily understandable codes are QTY and PRICE. Here, QTY means the number of quantities of stock that you want to buy. PRICE is the cost at which you want to buy the share. However, the other codes are the ones that we are going to discuss in this post.

zerodha product codes market place

Zerodha product codes:

  • CNC: Cash N Carry
  • MIS: Margin Intraday Square-off
  • MKT: Market Order
  • LMT: Limit Order
  • SL: Stop Loss
  • SL-M: Stop loss market
  • Trigger Point
  • Disclosed quantity

Before we discuss the zerodha product codes, here are few terms that you need to know first.

What is a market order?

When you want to buy/sell a share at the current market price, then you need to place a market order. For example, if the market price of a company is Rs 100 and you are ready to buy the share at the same price, then you place a market order. Here, the order is executed instantaneously.

What is a limit order?

Limit order means to buy/sell a share with a limit price. If you want to buy/sell a share at a given price, then you place a limit order. For example, if the current market price of a company is Rs 200, however you want to buy it at Rs 195, then you need to place a limit order. When the market price of ABC falls to Rs 195, then the order is executed.

Also read: #27 Key terms in share market that you should know

What is a stop-loss?

STOP LOSS is used to limit the losses when the price of a stock starts falling.

For example, let’s say that you are holding a stock at Rs 300. However, the price of that stock starts falling and you fear to book losses. In such scenario, you can place an order to limit the loss to Rs 295. It specifies that you want to execute a trade but only if the specified price is met.

Stop loss is a very good tool to limit the risks.

Zerodha product codes explanations:

  • LMT: This is used for placing a limit order.
  • MKT: This is used for placing a market order.
  • Trigger Price: This is used in stop loss orders. It is the price at which you want ‘stop loss’ to be triggered.
  • Stop Loss (SL): This is used to place a stop loss at the limit price. Here you need to specify a Limit price and a trigger price. When the trigger price is reached, then the stop loss order is sent to the exchange at a limit order mentioned by you.
  • Stop loss market (SL-M): This is used to place a stop loss at market price. Here you just have to specify the trigger price. When the trigger price is reached, then the stop loss order is sent to the exchange at market price.
  • MIS: It stands for Margin Intraday square off. MIS is used for Intraday trading with leverage. All MIS position is auto squared off at the end of the day session.
  • CNC: It stands for Cash n carry. CNC is used in delivery based equity. There is no leverage provided in CNC. However, there is also no auto square off at the end of the session.
  • Disclosed quantity: This allows traders to disclose only a part of the actual quantity of the stocks that he bought or sold. This disclosed quantity should be more than 10% of order quantity.For example, let’s say you bought 1000 stocks. However, you can disclose only 400 stocks (if you want). Only the discloses quantity will be shown on market screen.What is the use of disclosed quantity? The order book is open to all active person on the exchanges. So, all these people can see what quantity of stocks you have ordered. However, the problem here is that once they know your quantity and price, they can change their own order (increase/decrease their order amount/quantity). This might affect your orders adversely.Disclosed quantity is beneficial for those people who trade in large quantities.

Also read: Full service brokers vs discount brokers: Which one to choose?

Now, these were the terms that are shown in the marketplace of zerodha. However, if you click on ‘ADVANCED’, you can find more ZERODHA product codes. Although you can execute all your buy/sell orders without changing the advanced order, however, it’s better to have full knowledge. 

zerodha advance options

Here are the advanced zerodha product codes:

  • REGULAR: Regular orders
  • BO: Bracket order
  • CO: Cover order
  • AMO: Aftermarket order
  • DAY: Day validity
  • IOC: Immediate or Cancel

AMO: It stands for aftermarket order. You can use this facility to place an order when you can’t buy/sell during the trading time. You can place your order between 4:00 PM to 08:59 AM i.e. after the post-closing session and before the pre-opening session.

BO: Bracket order is used for higher leverages (than that of MIS). Here, you place an Intraday buy or sell at limit order with a target price and a compulsory stop loss. All the orders are squared off before the end of the day.

CO: Cover order is used for placing intraday buy or sell at the market order for a high leverage (that trading using MIS). Here you just have to specify the stop loss. All the orders will be squared off before the end of the day.

IOC: It stands for ‘Immediate or cancel’. Here the order is executed as soon as it is released. If the order fails to execute, then it is immediately canceled. In case of part execution, the remaining quantity (which is not executed) will be canceled.

Also read: How to Open a Demat and Trading Account at Zerodha?

That’s all. I hope the post is useful to the new traders. If you have any questions regarding any zerodha product codes, please comment below. Will be glad to help.

Happy Investing!!

Tags: Zerodha product codes, What is CNC and MIS, SL and SL-M, CNC and MIS
How to choose a stockbroker in india

How to choose a stockbroker? – For beginners

Selecting your stockbroker is the one the biggest step that you take while entering the world of investing. You cannot start investing/trading until you have a broker (unless you are using someone else’s account).

When I opened my first brokerage account, I had no one to guide me. I belong to a family where no one invests in stocks. My father has few holdings in mutual funds, FDs and LICs, however, he never invested directly in the stock market.

Therefore, I have to go through a number of websites to educate myself about where to start and which stockbroker to chose.

That’s why I am writing this post for the beginners so that they can say a lot of time. I won’t be recommending any stockbroker in specific here, but I will teach you how to choose a stockbroker. So, let’s get started.

First of all, I would like to mention that your first broker won’t necessarily be your broker for life. You can definitely switch to another broker anytime you like. Personally, I have also switched brokers.

However, it’s good to start with a decent broker and choosing a bad stockbroker may ruin your first experience in investing/trading. In addition, it may also cost you some bucks as switching cost if you moved to another broker.

How to choose a stockbroker?

There are a number of factors that you need to check before choosing your stockbroker. Here are a few of them:

  • Research:

Conduct your own research. Listen to the advice of the experienced investors/traders but do not follow them blindly. You can carry out your own research by visiting various stockbroker’s website. Get a general idea about the stockbroker, account opening charges, facilities offered etc.

  • Background & reputation of the broker:

Check the background of the stockbroker and their reputations. You can inspect the reviews, complaints and have a survey of the personal experience by the existing users. If you are going to use the mobile platform, check the mobile app ratings on the app store.

hdfc securities

Image source: Google play store

  • Brokerage and other charges:

Stockbrokers are the registered members of the stock exchange and they can directly buy & sell shares in the share market for their clients. They charge some commission for offering this facility known as brokerage charge.

Now, there are two types of stock brokers in India: A) Full-service broker & B) Discount broker.

Full-service broker provides advisory service along with the trading platform. These brokers charge commissions on every trade their clients execute as a percentage of each trade executed.

Discount brokers only provide the trading facility. They offer low brokerage and charges a flat fee per transaction.

Read more here: Full service brokers vs discount brokers: Which one to choose?

Choose a suitable broker according to your preference. If you want stock research advisory, go to a full-service broker. If you just want a trading facility and do not want to pay an extra commission, go with a discount broker.

You can use this site for brokerage comparision and calculation.

  • Customer Services:

If you are new to investing/trading, you will require a lot of customer service, unless you have a guru or advisor. Check the customer service provided by the stockbroker. An easy way is to try calling their customer care helpline number. If it takes years for the customer executive to pick up the phone, then avoid that stockbroker. Further, if you want one-to-one customer service, then check the website of the stockbroker if they provide personal services.

  • Trading platform:

This is one of the most important factors to examine. Inspect whether the trading platform offered is friendly and easy to use. Check the demo videos of the trading platform on youtube.

  • Advisory & research facilities:

If you are not planning to invest in your own and need advisory, then check for the facility offered. The reliability of the advisory is a must to check. The stockbroker should have a good reputation in advisory and research works.

  • The range of facilities offered:

If you are looking for diversified investment and planning to also invest in other options like mutual funds, bonds, currencies, FSs etc, then check if these range of facilities are available with your broker or not.

  • Hidden Charges:

There should be no hidden charges and all the charges incurred while transactions should be specifically mentioned. Asked for any hidden charges with your customer care executive before selecting the stockbroker. Transparency is the key to any service.

  • Fund Transfer:

Easy linking facility with your saving account should be available. Ask for the fund transfer process in your stockbroker. Online money transfer and withdrawal should be fast and easy.

  • Tools of education:

Many stockbrokers provide education facility. For example, Zerodha educates its clients via ‘Varsity’ and its blog for free. If you are in the learning phase, ask your customer support executive if any tools of education are available with your stockbroker. This is not a ‘must have’ for your stockbroker, however it can be an add-on.

Related Post: How to Open a Demat and Trading Account at Zerodha?

Most of the important points to are already covered above. However, there are few other points also that a beginner should know on ‘how to choose a stockbroker’. They are listed below:

If you are new to Indian stock market and want to learn the basics, here is an must-read book by Parag Parikh that I personally recommend you to read: Value Investing and behaviorial finance.

Few other points to know:

  • Discounts and low-commission are not always good:

If you are new to the market and you will need a lot of help in the service while getting started. Although, its good to pay less, however, if you are getting premium facilities at a commission, it’s better for the beginners. Once you are experienced, you can carry out your investing/trading on your own.

  • Availability is important:

There are very few branches of discount brokers, whereas there are tons of branches of full-service brokers. If you can find a branch in your local, where you can easily go and personally meet the customer care executive to clear all your doubts, then its good to go.

Check out our upcoming course on stock market here.

  • Do not avoid customer services:

Investing/trading using online platforms are easy to use and have a number of resources available online. However, there may be a few times when you will require technical support. It’s good to have someone to look for in such cases. Do not avoid customer services. Look for the reviews before opting for any stockbroker and if the customer service is poor, then search another broker.

  • Look for extras/add-ons:

Many stockbrokers provide extras like no ‘annual maintenance charge’ for the first year, free brokerage amount of Rs 500 etc. Check the add-on and added benefits. It’s always good to have some bonus.

Ready to start your journey to become a succesful stock market investor? If yes, then here’s an amazing course for newbie investors: INVESTING IN STOCKS- THE COMPLETE COURSE FOR BEGINNERS.

That’s all. These are the important points before selecting stockbrokers. I hope this post on ‘How to choose a stockbroker?’ is useful to the readers. If you have any doubts, feel free to comment below. I will be happy to help you out.

Full service brokers vs discount brokers

Full service brokers vs discount brokers: Which one to choose?

Hello Investors. Today we are going to discuss one of the hottest topic in the investing world- Full-service broker vs discount broker and which one to choose? However, before moving forward, let us first understand who is a stockbroker.

Who is a stockbroker?

A stockbroker is an individual/organization who is a registered member of the stock exchange and are given license to participate in the securities market in place of its clients. Stockbrokers can directly buy & sell stocks in the share market on behalf of their clients and charge a commission for this service.

Now, there are two types of stock brokers in India:

  1. Full-service brokers (Traditional Broker)
  2. Discount brokers (Budget brokers)

Let us understand each type of stockbrokers:

Full-Service Brokers (Traditional Brokers)

They are traditional brokers who provide trading, research, and advisory facility for stocks, commodities, and currency. These brokers charge commissions on every trade their clients execute as a percentage of each trade executed. They also facilitate investing in Forex, Mutual Funds, IPOs, FDs, Bonds, and Insurance.

Few examples of full-time brokers are ICICIDirect, Kotak Security, HDFC Sec, Sharekhan, Motilal Oswal etc.

Discount Brokers (Budget Brokers)

Discount brokers just provide the trading facility for their clients. They do not offer advisory and suits for a ‘do-it-yourself’ type of clients. They offer low brokerage, high speed and a decent platform for trading in stocks, commodities and currency derivatives. A few examples of discount brokers are Zerodha, ProStocks, RKSV, Trade Smart Online, Achiievers, SAS online etc.

Full service brokers vs discount brokers:

Here are the key differences between full service brokers vs discount brokers based on different criteria:

 FULL SERVICE BROKERSDISCOUNT BROKERS
BrokerageThey charge commission in percentage terms of each trade executed.They offer a flat fee on each trade executed.
Brokerage ratesTypically between 0.3 to 0.7%Generally Rs 20 per trade.
Primary ServiceThey provide trading platform along with advisory for investment.They only provide a trading platform (no investment advisory provided).
Suitable forFull service brokers suit those who want advisory for their investment.The discount broker is suitable for those who research on their own or have a financial advisor.
Research DepartmentThey have their own research departments for advisory.No such department.
NetworkThey have a large number of branches in different cities.They do not have many branches.
Customer serviceFace to face customer service available.Online services for customers.
Other FacilitiesBesides stocks, commodities & currencies, other facilities offered are forex, mutual funds, IPOs, FDs, bonds, insurance, etcOnly stock, commodities & current trading available
Add on servicesResearch reports, recommendations, funding, extended margin etcFocuses mainly on trading
3-in-1 Account (Saving+demat +trading)AvailableNot available
Examples/ Top BrokersICICI Direct, HDFC sec, Kotak securities, Sharekhan, Motilal Oswal, Angel Broking, Axis direct, Edelweiss, Aditya Birla money etcZerodha, Prostocks, RKSV, Trade smart online, Tradejini, SAS online etc.

Also read: Where to open your Demat & Trading account?

Which one should you choose?

The answer depends on your knowledge, preference and time. If you want stock advisory for your investment, then you should choose a full-time broker. On the other hand, if you want to do research on your own or you have a financial advisor, then you should choose a discount broker.

Further, you should also consider brokerage charges carefully before selecting your stockbroker.

I will highly recommend you to choose a discount broker (like Zerodha) as it will save you a lot of brokerage amount.

Initially, I started with ICICI direct (which is a full-service broker), but soon realized that it was too expensive compared to the discount brokers. Moreover, I wasn’t using the advisory facility by the ICICI direct. Hence, it didn’t make sense to pay extra brokerage charges even if I can get similar benefits on the cheaper stockbrokers.

I then shifted from ICICI direct to Zerodha.

Zerodha (discount broker) charges brokerage of 0.01% or Rs 20 (whichever is lower) per executed order. This is way cheaper compared than ICICI direct (full-service broker) which asked a brokerage of 0.5% on each transaction. If you buy stocks for Rs 50,000 in ICICI direct, then you have to pay a brokerage of Rs 250 (on the other hand, Zerodha will ask only Rs 20, a difference of Rs 230).

Also read: Different Charges on Share Trading Explained- Brokerage, STT & More

In addition, as this amount is charged on both sides of the transaction (buying & selling), hence you have to pay a total of Rs 500 for the complete transactions (way too expensive compared to a total brokerage of Rs 40 on both sides of transactions in Zerodha).

In short, if you are new to investing and want to open a trading account, I would recommend choosing discount brokers, so that you can save lots of brokerages.

Related Post: How to Open a Demat and Trading Account at Zerodha?

However, in the end, it’s your knowledge, preference and time that matters the most while selecting a stockbroker. If you have enough knowledge and time for your stock research and prefer not to pay an extra commission, then you should go for a discount broker. On the contrary, if you do not mind paying extra commission for the advisory services to save your time, you can select a full-service broker.

If you are new to stock market and want to learn the basics from scratch, here is the best selling book that I highly recommend you to read: How to Avoid Loss and Earn Consistently in the Stock Market by Prasenjit Paul

That’s all for this post. I hope you have understood the difference between full service brokers vs discount brokers. Further, if you have any doubts, do comment below. I will be happy to help you out. Happy Investing.

Different Charges on Share Trading

Different Charges on Share Trading Explained- Brokerage, STT & More

Different Charges on Share Trading Explained. Brokerage, STT, DP & More- There are a number of charges involved while trading in India i.e. buying or selling of shares. Some of them are common like brokerage charge & STT, while there are many whom the investors are not afraid of. In this post, I am going to explain all of the different charges on share trading. Some of them are brokerage charge, Security transaction charge, stamp duty etc. But before we learn about them, there are few basics things that we need to understand first.

So, be with me for the next 8-10 minutes to understand the explanation of all the different charges on share trading.

Following are the things that you need to know first:

1. Intraday Trading and Delivery:

  • When you buy & sell a share on the same day, then it’s called an Intraday trading. For example, you bought a share in the morning and sold it before the market closes on the same day, then it will be considered as an intraday
  • On the other hand, when you buy a share and hold it for at least one day, then it’s called a delivery. For example, you bought a share today and sold it any day but today then it will be considered it as a delivery. Here you can sell the stock tomorrow, or the day after that, or a week later, a year later or 20 years later.

 2. Full-Service Brokers and Discount Brokers:

  • Full-Service brokers are the traditional brokers who offer full-service trading like stocks, commodities, currency along with research and advisory, sales and asset management, investment banking all in one account. For example, ICICI Direct, Kotak Securities etc.
  • Discount brokers are who offer high speed and the state-of-the-art execution platform for trading in stocks, commodities and currency derivatives. They charge a reduced commission and do not provide investment advice. For example, Pro stocks, Zerodha, Trade Smart Online etc.
  • In general, a full-service broker charge between 0.01% – 0.50% brokerage charge on Intraday and delivery.
  • The discount brokers charge a flat fee (fixed fee of Rs 10 or Rs 20 per trade) on intraday and delivery trading. There are also a couple of discount brokers who do not charge any fee on delivery trading.

It is important to note that you have to pay a brokerage charge on both times of trading i.e. while buying a share and selling a share. There are some brokers (very few) who charge brokerage fee only at one side of transaction i.e. either on buying or selling.

Let’s take an example to understand the brokerage charge better. Suppose there is a brokerage firm called – ABC. Now, ABC charges a brokerage fee of 0.05% on intraday trading and 0.30% on delivery trading. The total charges on both tradings can be given as-

Intraday Trading Delivery
Brokerage charge= 0.05% of total turnover Brokerage charge= 0.30% of total turnover
If we buy a single stock worth Rs 100, then
Brokerage charge = 0.05% of Rs 100 = Rs 0.05
If we buy a single stock worth Rs 100, then brokerage charge = 0.30% of Rs 100 = Rs 0.30
Total brokerage charge on trading (for both buying and selling) = 2 * 0.05 = Rs 0.10 Total brokerage charge on trading (for both buying and selling) = 2 * 0.30 = Rs 0.60

As the competitions in the brokers are increasing, the brokerage charges are decreasing. In coming days, these rates can even reduce further.

Apart from brokerage charge, there are also an additional couple of charges and taxes to be paid while share trading. For example, Security transaction tax, service tax, stamps duty, transaction charges, SEBI turnover charges, depository participant (DP) charges and capital gain tax.

Let’s understand the other different charges on share trading and taxes involved first. Then we will see an example for further understanding.

Different Charges on Share Trading-

Security Transaction Tax (STT):

  • This is the second biggest charge after the brokerage charge.
  • For delivery trading, STT is charged on both sides (buy & sell) of trading.
  • For intraday trading, STT is charged only when you sell the stock.
  • In general, for delivery, the STT charge is around 0.1% of total transaction (on each side of trading)
  • For intraday, the STT charge is around 0.025% of the total transaction (while selling).

Service Tax:

It is same for intraday and delivery trading. Service tax is equal to the 15% of whatever brokerage charge you paid.

Stamp Duty:

This is charged by the state government. Different states have different stamp duty. Here is the stamp duty of two of the Indian states-

  Intraday Delivery
Maharashtra 0.002% 0.01%
Delhi 0.0025% 0.0025%

Stamp duty is also charged on both sides of trading (buying & selling) and are charged on the total amount (turnover).

Transaction Charges:

  • This is charged by the stock exchanges. Transaction charges are charged on both sides of the trading and are same for both intraday & delivery.
  • National stock exchange (NSE) charges a transaction fee of 0.00325% of the total amount.
  • Bombay stock exchange (BSE) charges a transaction fee of 0.00275% on total amount.

SEBI Turnover Charges:

  • Here, SEBI stands for Securities exchange board of India and it is the security market regulator. SEBI makes the rules and regulations for the exchanges.
  • It is charged on both sides of transaction i.e. while buying and selling.
  • The SEBI turnover charge is 0.0002% of the total amount and is same for both intraday and delivery trading.

Depository Participant (DP) Charges:

  • There are two stock depositories in India- NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited).
  • Whenever you buy a share, it is kept in an electronic form in a depository. For this service, the depositories charge some fixed amount.
  • They don’t charge the investors directory but charge the depository participant. Here, the broker company or your demat account company is the depository participant (DP).
  • DP acts as a linkage between the depository and the investor as the investors cannot approach depository directly. So, overall the depository charges the depository participant and then the depository participant (DP) charges the investors.
  • DP charges are a flat of between Rs 10 to 35 depending on your broker and this is also charged only for delivery trading (not for intraday)

Capital Gain Tax:

  • This is the most important tax to understand for a trader.
  • There are two types of Capital gain tax – Short-term capital gain tax and Long-term capital gain tax.
  • When you sell a stock before 1 year of buying, then it is considered as a Short-term. Here a flat 15% of the profit is charged as short-term capital gain tax.
  • When you sell a stock after 1 year of buying, then it is called long-term capital gain tax. There is no tax on long-term capital gain.
  • For a short-term capital gain tax, the delivery trader has to pay flat 15% and it doesn’t matter what tax slab they are in. But this doesn’t apply to an intraday trader as they have to pay capital gain tax according to their tax slab.
  • As the long-term capital gain tax is nil, the big investors try to get maximum profit from it by investing for long term.

If you want to read further in details, I will recommend you to read this book: Everything You Wanted to Know About Stock Market Investing -Best selling book for stock market beginners. 

Now, let us see an example to understand these different charges on share trading and taxes involved better. Suppose there are two traders- Rajat and Prasad. Here Rajat is a delivery trader who invests in long-term i.e. for 2-3 years. On the other hand, Prasad is an intraday trader.

They both have their accounts in same brokerage company named ABC. The brokerage charge for ABC is 0.05% on intraday trading and 0.30% on delivery trading. Also, let us suppose that both Rajat and Prasad have invested a total of Rs 10,000 in the shares of Tata Motors. In addition, they both live in Maharastra.

Now the different charges and taxes paid by them for complete trading i.e. from buying to selling the shares can be given as-

Rajat

Delivery Trader (Long term)

Prasad
(Intraday Trader)
Total Investment Rs 10,000 Rs 10,000
Exchange NSE NSE
Brokerage Charge 0.30% of Total Amount
= 0.30% of Rs 10,000 = Rs 30
Total brokerage charge= 2*30 = Rs 60
0.05% of Total Amount
= 0.0% of Rs 10,000 = Rs 5
Total brokerage charge= 2*5 = Rs 10
STT 0.1% of total amount
= 0.1 % of Rs 10,000 = Rs 10
Total STT = 2*10 = Rs 20
0.025% of total amount
= 0.025 % of Rs 10,000 = Rs 2.5
Total STT = 1*2.5 = Rs 2.5
Service Tax 15% of brokerage charge
=15% of Rs 60 = Rs 9
15% of brokerage charge
=15% of Rs 10= Rs 1.5
Stamp Duty (Maharashtra) 0.01% of total amount
= 0.01% of Rs 10,000= Rs 1
Total stamp duty = 2*1= Rs 2
0.002% of total amount
= 0.002% of Rs 10,000= Rs 0.2
Total stamp duty = 2*0.2= Rs 0.4
Transaction Charges 0.00325% of total amount
= 0.00325% of Rs 10,000= Rs 0.325
Total stamp duty = 2*0.325= Rs 0.65
0.00325% of total amount
= 0.00325% of Rs 10,000= Rs 0.325
Total stamp duty = 2*0.325= Rs 0.65
SEBI Turnover Charge 0.0002% of total amount
= 0.0002% of Rs 10,000= Rs 0.02
Total stamp duty = 2*0.02= Rs 0.04
0.0002% of total amount
= 0.0002% of Rs 10,000= Rs 0.02
Total stamp duty = 2*0.02= Rs 0.04
DP Charge Rs 15 NIL
Capital Gain Tax 0 Pays according to tax slab

 

Overall, here is the summary of all the charges and taxes paid by Rajat and Prasad.

  Rajat Prasad
Brokerage Charge Rs 60 Rs 10
STT Rs 20 Rs 2.5
Service Tax Rs 9 Rs 1.5
Stamp Duty (Maharashtra) Rs 2 Rs 0.4
Transaction Charges Rs 0.65 Rs 0.65
SEBI Turnover Charge Rs 0.04 Rs 0.04
DP Charge Rs 15 0
Capital Gain Tax 0 Pays according to tax slab
Total Charges Rs 106.69 15.09 + Capital Gain Tax

On the first glance, it looks cheap to invest in intraday as the total charges are comparatively less here. But you should note that the frequency of trading for intraday traders is quite high. So, they have to pay these charges again and again.

Also, let us take a scenario where Prasad chooses to sell his stocks after 2-3 days as the prices were quite low on that day and he was expecting some price increase on next days. In such case, Prasad turns from an intraday trader to delivery trader. Hence, his total charges also changes from Rs 15.09 to Rs 169.69.

Let us also assume that Prasad makes a profit of Rs 100 on selling. So, the capital gain tax that he has to pay will be equal to 15% of Rs 100 i.e. Rs 15. Now his situation turns out like this-

Total Charges Rs 106.69
Short term capital gain tax Rs 15
Total Charges Rs 124.63
Profit Rs 100

Here, although Prasad’s profit is Rs 100, still his expenditure is Rs 124.69 on different charges. Overall, Prasad is in loss of Rs 24.69.

Hence, charges and taxes are a very important part of trading and should not be ignored. You might think that you are in profit, but the real profit is the one which is left after deducting the charges and profit. I hope the traders will keep this in mind before trading the next time.

New to stocks and confused where to start? Here’s an amazing online course for the newbie investors: INVESTING IN STOCKS- THE COMPLETE COURSE FOR BEGINNERS. Enroll now and start your stock market journey today!

Tags: Different Charges on Share Trading Explained, Different Charges on Share Trading Intraday, Different Charges on Share Trading long term, Different Charges on Share Trading in delivery trading, common different Charges on Share Trading 

How to trade in ICICI Direct? Buy:Sell Stocks

How to trade in ICICI Direct? Buy/Sell Stocks

How to trade in ICICI Direct? Buy/Sell Stocks– ICICI direct is one of the best online broker websites for buying or selling a stock on the stock market. Using ICICI direct, you can buy or sell a stock within two minutes using your phone/laptop. The brokerage charge for the ICICI direct is decent and the interface is very user-friendly to easily understand how to trade in ICICI direct.

In this post, we are going to discuss how to trade in ICICI direct. So, be with me for the next 5-10 minutes to learn the basics of trading with ICICI direct.

For those of you who are here for a quick answer, here is the video on how to trade in ICICI direct which can help you to learn the trading process fast. But, I do recommend you to read the complete post in order to get an in-depth knowledge of trading in ICICI Direct. Here it the video –

Youtube Video:

Source: ICICI Direct

First of all, you need to know that the market opens from 9:30 AM to 3:30 PM from Monday to Friday, excluding a few national holidays like Independence day, Republic day etc. You can get the complete list of holidays in a year from BSE/NSE website. So, basically, you can place an order to buy the stocks during market days when the market is opened from 9:30 Am to 3:30 PM. At this time you can place orders to buy the stock at the current market price or you can set a limit price (Say you want to buy a stock whose market price is 90, only when the price falls to 88. Then you place a limit price 88 against the market price which is 90).

You can also place orders outside the market timings i.e. before 9:30 AM or after 3:30 PM. But the order will be executed only when the stock market opens. Although these are advantageous for those who can’t place an order during the market time, there are few disadvantages of placing the orders after market timings.

For example, you won’t know the opening price of the stocks for the next day, so it might open at a higher price the next day which may lead you to reset your order price or cancel (and you might even not be able to buy the stock). So, it would be preferable to place orders for the stocks only during the market time so that you have the full information on the current market price of the stock.

Now that you know about the background of the stock market timings, let’s move towards the topic of the post – how to trade in ICICI direct? Buy and sell stocks.

If you need help in opening your stock brokerage account, feel free to check out this awesome website- Nifty Brokers

Step by step guide for How to trade in ICICI direct:

Step 1: Login to your ICICI Direct account

First, you need your account credentials to login in the ICICI direct. If you open a 3-in-1 (Saving+Demat+Trading) account in ICICI Direct, you can have the access to buy/sell and hold your stocks using the same account. Therefore, if you are new to trading, I will suggest you open a 3-in-1 account in ICICI Direct.

After you have opened your account in the ICICI direct, you will get your username and password to log in. The first step is to the google and search, ‘ICICI Direct’. Open the first link that comes in the search engine (www.icicidirect.com). Then click on login in the top right-hand corner. The website will ask your credentials like username, password, and date of birth/pan card. After entering the correct details, you can enter inside your ICICI direct account.

STEP 2: Allocate funds for buying stocks

The next step after logging in your ICICI direct account is to allocate funds in the trading account.

The concept of allocating funds in very simple. Let’s say you have Rs 50,000 in your saving accounts in ICICI bank (or any other bank linked to your trading and demat account). And you want to buy stocks worth Rs 500. Then, you need to transfer that amount from your saving account to the trading account so that you can place the order of the stock worth Rs 500. This can be done by allocating the fund.

‘Allocate fund’ option can be found on the landing page after logging and is highlighted here.

Typically, this step of allocating funds can be done within a minute if you have a 3-in-1 ICICI Direct account. The steps are as follows:

  • Go to the option Secondary, Market Equity, ETF (Note: if you want to buy IPO, Mutual funds then you have to go to other option).
  • Select ‘ADD’ option and enter the amount you need to add.
  • Then, click on ‘Submit’.
  • You can see the allocated fund in the ‘Current Allocation’ after submitting.

Step 3: Place order for the stock

This is the third and final step for purchasing stocks using ICICI direct. After allocating the fund, you should select the option ‘Place order’, which is present in the equity option. This option is highlighted here:

After selecting the place order, you have to follow the following steps. The steps are simple and can be performed within a minute:

  1. First, select the ‘Cash’ option in the Product.
  2. Next, you have the option to select the stock exchange. You have two options- NSE (National stock exchange) or BSE (Bombay stock exchange). You can choose anyone and it doesn’t make much difference as prices are almost the same on both exchanges and follows an almost the same trend. (I generally prefer NSE.)
  3. Then you can view your limit on how much money you have to buy the stocks. This is the allocated money which you added in step 2. If you need more money, you can add amount by allocating extra funds.
  4. Now enter the stock. For example, if you want to buy a stock of ‘Tata Motors’, start typing ‘tata mot..’ on the stock option. The drop-down options will appear and you can select your stock from the list.
  5. Next, you need to enter the quantity. the number of stocks that you want to buy.
  6. After that, you have to select that option for order validity. Here you have three options – DAY, IOC or VTC. If you want to place an order for that day only, you should select Day. If you are placing a limit price and want to continue the placed order for the next few days, then you can select VTC 0valid till cancellation. (Prefer ‘day’ order)
  7. Next, you have to select the Order Type. There are two options here – Market and Limit. I have already explained these earlier in this post. If you want to buy the stock at the current market price select ‘Market’ option. If you want to buy the stock at a limit price, select the ‘Limit’ option.
    For example, let’s say that Tata motor’s stocks are currently trading at a market price of Rs 469.10. If you want to buy that stock at market price, then you should select the ‘Market’ option. If you want to buy the tata motors stock only when the price is Rs 465 or lower, select ‘limit’ option.
  8. If you have selected ‘limit option’ in the Order Type, then you need to enter the ‘Limit Price’ in the next step. (This is Rs 465 in the previous example of Tata motors).
  9. The last option is the stop loss trigger price. You can leave this option blank and is not a must-fill option. This is an order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit an investor’s loss on a position in a security. You can study more about stop trigger price here.
  10. Finally, select ‘Buy Now’

After clicking on ‘Buy Now’, you will be directed to a confirmation page. You need to confirm the details. And Tada!!!! You have bought a stock! Congratulations!!!!

If you want to re-confirm the stock that you’ve bought, you can do check by selecting the option ‘TRADE BOOK’ in equity. The option is highlighted here.

So, that’s all. This is the process of How to Trade in ICICI Direct.

Quick Note: After the trade in complete, it generally takes two-three days for the stock to reflect in your portfolio. Do not worry if can’t find the stock in your portfolio on the very next day since you executed the trade. It will eventually show up. The process takes T+2 days for transferring it from the previous owner to your account.

That’s all. I hope this post is useful to the readers. If you have any doubts or need any additional help, feel free to comment below. I will be happy to help you out.

New to stocks and confused where to start? Here’s an amazing online course for the newbie investors: INVESTING IN STOCKS- THE COMPLETE COURSE FOR BEGINNERS. Enroll now and start your stock market journey today!

Tags: How to trade in ICICI Direct, How to trade in ICICI Direct in India, buy stocks how to trade in ICICI Direct, How to trade in ICICI Direct demat account, How to trade in ICICI Direct trading account