Last Updated on 09/06/2022 by Deepak Singla
A stockbroker is a person or an organisation acting as an intermediary between you (the investor) and the stock exchange for the transaction of shares. A stockbroker charges a commission fee for acting as an intermediary. You cannot buy or sell shares in National Stock Exchange or Bombay Stock Exchange without a registered stockbroker.
An online stock broker is one who interfaces with the investor through the medium of the internet.
In this article, we shall discuss the common mistakes to avoid while choosing an online stock broker.
You may get lured by the cheap brokerage offered by an online stock broker and open a trading account with them. However, do not neglect the Annual Maintenance Charges (AMC). Often brokers tend to offer significantly cheap brokerage but may impose very high AMC.
Accepting all Offers
If you, as an investor, are in a nascent stage, the online stock broker would tend to propose several catchy offers and recommendations to you to attract more investments. However, often investors fail to conduct proper research on the offers and get their money wiped out. Thus, it is not advisable to accept all the recommendations of the online stockbroker.
There are numerous online stock brokers available for online trading. However, it is not certain that all of them are duly registered and licensed by the Securities and Exchange Board of India (SEBI). Thus, many investors neglect the registration and licensing of the broker and invest money through them. Such haphazard investments can lead to huge monetary losses.
Not Considering the Feedback
It is always advisable to check and consider the feedback and reviews of the online stock broker before actually investing money through them. Before choosing the online stockbroker, expert advice should be sought. You can also speak to the representative of the stockbroker. Take all the reviews and feedback you can get before choosing a stockbroker.
Investors at the early stage of trading often face multiple issues with the online stockbroker. Such investors switch to another online stock broker and agree to their terms and conditions out of impatience. Such an approach towards investments can make you lose money in the stock exchange. Thus, it is advisable to properly research and resolve the issues with the initial broker and only in case of unavoidable inconvenience a switch should be made to another broker.
An online stock broker is one of the most important components of online trading. Therefore, you should always avoid the above-mentioned common mistakes before choosing a stockbroker and investing your money through them.