Online Brokers

Stock brokers are those who are authorised to tradeindividuals who trade on behalf of their clients. The
securities in a stock exchange of which they areonline stock brokers provide their clients with lot of
members. Any investor interested in buying or sellingdata, information, researched and expert opinions on
a stock has to approach a stock broker. In the initialwhich stocks to purchase and sell. They send
days, stocks were traded by stock brokers byfrequent newsletters on the happenings in the
shouting the price of the stock on the floor of themarket, information about IPOs, mutual funds and
stock exchange. This method was called open outcryNFOs.
method of trading. At that time, shares were inAn individual cannot go directly into any exchange
physical paper format. This used to be a very timeand trade in securities. Therefore he needs a stock
taking, cumbersome and risky process. The stockbroker for him to transact. An individual before
market trading was largely limited to professionals,selecting an online stock broker should take the
stock brokers and some enterprising individuals.following factors into consideration: The track record
However, with the advent of electronic trading afterand financial status of the broker over the years, the
the shares were dematerialised in 1993, theswiftness of the web site in responding to the
constraint of being at the same place to trade hasqueries, the rates and commissions charged by the
gone. It is during this time that a scam broke out inbroker in comparison with others, the services
the country by a stock broker. Online connectivityoffered depending on our requirement and level of
has helped stock brokers to trade from any part ofexpertise and the authenticity of the website.
the country. The masses started actively participatingThe advent of online stock brokers has made it easy
in the securities trading since then.for the retail investor to participate and invest in
Lately, the stock exchanges prefer corporate withsecurities. The online brokerage firms offer customer
good track record as stock brokers to individuals.care branches and personalised service. All the stock
Guidelines were laid out for selection of an individualbrokers are also registered with SEBI, Securities and
or corporate as a member broker. Net worth,Exchange Board of India. SEBI acts as a watchdog
education and experience of the applicant are takenfor investors and ensures that the rules are followed.
as criteria. The selected member broker has to pay aThese online brokers operate by using the computer
security deposit and also an annual membership fees.terminal in their office or premises. The online stock
A stock broker may operate on behalf of his clientbrokers also manage the portfolio of their clients
for a commission or even trade in securities for hisbased on their financial status, risk appetite and
own self. Normally shares are traded in two methods.future goals. However, no online stock broker takes
One is cash trading and other one is day trading. Inthe responsibility for any loss incurred by the client
cash trading the shares are purchased or sold with anby following their advice. There may be some stock
intention to deliver or keep the possession of thebrokers who are not qualified or not registered but
share and the value of the share has to be deliveredstill operating in the market. They may mislead you.
on or before the settlement day. Therefore theyTherefore it is imperative for the individual to
need to be delivered on or before the settlementconsistently monitor the stock market, track the
day. Where as in day trading method the shares areperformance of his stocks, set some targets for the
purchased and sold within the day and therebyreturns and set a loss control limit to complete a
squaring off their transaction.great portfolio.
Online stock brokers are mainly corporate or