Process to Choose a Stock Broker

The advent of technology and automation has spread their wings
in every sphere. Similarly in the field of stock market it has
left a deep impact. The "open out-cry system" that prevailed few
years ago in the security market has been replaced by computerized
broking system. The brokers are the middlemen between the customers
and the stock exchange.

The question may arise that what is the source of revenue for the
brokers? The answer is simple one - the brokers earn their bread
through charging commissions on every transaction passed through them.
Such commission is better known as "brokerage". It is charged against
the service that a broker renders to its customers. However, in this
respect it should be borne in mind that brokers of
Indian Stock Market
often provide advisory services, regarding how to invest and where
to invest, but hardly charge for that.

This was all about a brief introduction of a broking firm; now the most
important question that crops up is how to choose a stockbroker? To play
safe in the market, you should get hold of a broking firm keeping the
following guidelines in mind.

SEBI Registration: The very first thing that you should look
for while choosing a stock broker is whether it is registered under
the Securities and Exchange Board of India(SEBI).
If the Broker is registered under SEBI, then it remains accountable to
you at every point of time. If you, ever, face any difficulties with
a particular broker then you can directly intimate such to the
regulatory authority, SEBI.

Self Planning: The next important thing that you should keep
in mind is your investment goals and the kind of services you are
looking for. Different brokers offer varieties of services, which
may not match with your need. Thus, before going for a stockbroker,
go through their service details.

Broker's Objectives: You should also remember to make a
thorough inquiry about the investment philosophy of a particular
broker that you choose and its procedure to handle clients.

Types of Brokers:There are mainly two types of brokers;
discount brokers and full-service firms. Generally, the discount
brokers often engage themselves in buying and selling with a low
commission rate but hardly render any advice to their customers.
On the other hand, full service brokers have the potential to
operate with you on different investment policies. In such ways you get
the opportunity to implement your plans more effectively and efficiently.
Thus, keeping these two types of brokers in your mind, you need to make a
wise and balanced judgment and go accordingly.

Track Record of Broker:The most effective procedure that
you can initiate while selecting a broker is applying the referral
procedure. In simple word it means, consult your friends and
relatives, who are already registered under a broker, about the
best broker that you can go for. Always ask your broker to provide with few
names of the clients they are dealing with, having the same background and
investment plans as you have.