Yesterday was a bizarre but big learning day for me. To save money, I signed up for a zero brokerage trading platform and have been using it since then. I faced several issues with the broker in the last 6 months but I felt that the broker will move its application to better servers but I was proved wrong yesterday yet another time. Around 1 PM on 3rd April 2022, I placed an order for a put option and the order was executed at a price 3 Rs below the price I intended to buy. I was in the loss straightway. Right now, I am feeling agitated. Like me, many of you may be enticed by the 0 brokerage ideas/platforms and this article may change your mind. I’ve shared the reasons why you must avoid such platforms.
Reasons to avoid zero brokerage trading accounts
Featureless
People ask brokers to add new features, but the companies are not in a hurry to build and add the new feature to their applications. For example, the bracket order feature in one of the trading platforms I was using was in development for months. This firm used to display a chart in a small frame and whenever you opened the chart in a new tab, and switched to another tab where you have opened another website/web page, the chart would disappear.
Ugly user interface
You won’t find any 0 brokerage firm whose dashboard looks great. There would be some flaws no matter how reputed the firm is. I don’t judge things by looks but you will feel nice using software or web application that has a good interface. I have already mentioned one such UI-related issue in the above paragraph.
Intermittent issues
Imagine you have bought stock. Soon after buying the instrument, its price moves higher and the broker’s dashboard stops working. Stock markets are highly volatile and the price movement of instruments is not unidirectional. As soon as you’ve made a satisfactory profit, you may want to exit the position, or if you have suffered a loss, you may not want to lose money further and would want to exit the position immediately. If the broker through which you have placed the order stops functioning, you can’t do anything. The customer service team would be busy answering the phone calls of users who are in the same situation. They would be unreachable.
Frustrating
The above things frustrate users but to save money, the users keep using the zero brokerage platforms and suffer losses.
Not paying any brokerage sounds good but in reality, you won’t benefit anything from this. The Indian government imposes various taxes on stock market trades. To name a few, you pay transaction charges, GST, STT, Stamp Duty, etc.
Let’s take an example of an order. If you place 200 orders and the total transaction value is 21 lakh Rupees, you will have to pay 600+ Rs STT and 900+ Rupees transaction charges. If you’re using discount brokers (companies that charge 10 or 20 Rs per order), the charges would have been more than 5000 Rs (STT + other charges + 20/10 Rs per trade) but who places 200 trades in a day? If you’re doing so, you’re wasting your energy. You must spend this energy on learning to trade.
Each zero-brokerage company has its own limitations. I’ve covered the most common issues above. Will I use the platforms again? As mentioned earlier, I have stopped using 0 brokerage firms as I am done with the losses I encounter with them.
