Choosing a broker depends on individual conditions:

  1. For someone who is a heavy trader and speculates a lot – it is vital or rather most important to choose a Zerodha type discount broker.
  2. It doesn’t make any sense for anyone regardless of trading volumes or income to go with Banks related brokers like ICICI direct and HDFC sec, Kotak etc. – these just rip you off no matter how much you trade. Even if one pays 10k per year in brokerage – why even pay that when one can conveniently pay nothing with a ZERODHA type broker. I am surprised that someone like HDFC Securities refuse to charge less than 0.5% + GST which is almost 0.6% each way. This is just daylight robbery.
  3. In between there are guys who are desirous of maybe a better service and have mediocre volumes – they should again select either Zerodha type broker (depending on how much sensitive to brokerage they are) or a standalone broker who is charging them a maximum of 0.25% each way. Anything beyond that is ridiculous and hurts compounding tremendously in the long run.
  4. Research which brokerage houses provide to retail participants in my opinion is not worth any more than the waste in garbage bin that it needs to be thrown into. Most of the research done by brokers anyways, institutional or retail, is anyways glorified FIR report than incisive analysis and is frequently (or rather frequently and deliberatly if you know what I mean) ill-timed as well. If one assigns equal investment dollars to each of their buy recommendations, then I can bet such an investment strategy will never even create 1% alpha in the long term. I can maybe write a book on this point but enough discourse. So getting attracted to a broker because of research is not the right thing to do.
  5. All these talks about occasional glitches in tech etc. with discount brokerages are not that useful. The problems, if any and at the most not often, will pale in comparison to the big benefit of extremely low or zero brokerages for any logical investor who wishes to compound his capital.

Infact, here is another secret – for all those buying mutual funds if you buy a mf from say icici Sec you can’t buy direct option and only buy regular option and end up paying unnecessarily 1% commission (every year!!)unnecessarily to icici Sec or HDFC Sec as the case maybe. Zerodha on the other hand provides direct mf buying as far as I know – although I haven’t bought any mf in my life.

The choice is very simple, there is no reason other than lethargy maybe to go for a bank broker. And that’s the reason why Zerodha is the largest retail broker now.

Ps – I have no self interest in promoting any discount broker but it pains me to see so many gullible investors pay so much brokerage unnecessarily when better options exist.