Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in)

Understanding Discount Brokers in India

3 min read

Full-service stock brokers and discount brokers are two types of brokerage firms that offer different levels of service and fees to clients who want to buy and sell securities such as stocks, bonds, and mutual funds.

Full-service stock brokers typically provide a wide range of services, including investment advice, financial planning, and asset management. They may also offer access to a team of financial advisors and analysts who can help clients make informed investment decisions. These brokers typically charge higher fees for their services, which can include commissions on trades as well as annual or monthly fees.

Discount brokers, on the other hand, typically offer a more limited range of services and may not provide investment advice or financial planning. They may simply execute trades on behalf of clients for a lower fee, often charging a flat rate or a small percentage of the trade value as a commission. Discount brokers may also offer access to research and trading tools, but these may be more limited than what is offered by full-service brokers.

It’s important to carefully consider your investment goals and needs when deciding which type of brokerage firm to use. If you are a beginner investor or don’t have a lot of experience, you may benefit from the guidance and support offered by a full-service broker. On the other hand, if you are an experienced investor and don’t need a lot of hand-holding, a discount broker may be a more cost-effective option.

Here is a list of the top 20 discount brokers in the India:

  1. Zerodha
  2. Upstox
  3. 5 Paisa
  4. Angel Broking
  5. Fyers
  6. Alice Blue
  7. PayTM
  8. Samco
  9. Tradejini
  10. Zebu
  11. Flattrade
  12. Finvasia(Shoonya)
  13. Kotak Securities
  14. Dhan
  15. Jainam Duck
  16. Expresso
  17. TradeSmartOnline
  18. StoxKart
  19. CompositeEdge
  20. SASOnline


Here is a list of the top 10 discount brokers in the United States:

  1. Robinhood
  2. Charles Schwab
  3. E-Trade
  4. Interactive Brokers
  5. TradeStation
  6. TD Ameritrade
  7. Vanguard
  8. Ally Invest
  9. Alpaca
  10. Vanguard

Here’s a funny example to illustrate the difference between full-service and discount brokers:

Imagine you’re at a restaurant and you’re trying to decide between the fancy, full-service option or the no-frills, discount option.

The full-service restaurant has a team of waiters, sommeliers, and chefs who will help you select the perfect meal, recommend the best wine pairing, and even prepare the food right in front of you. They offer a wide range of services, but they also charge higher prices for their expertise and attention to detail.

On the other hand, the discount restaurant has a self-serve buffet where you can choose from a limited selection of pre-made dishes. There are no waiters or chefs to assist you, and you have to serve yourself. The prices are lower, but you have to do a bit more work to get your food.

In the same way, full-service stock brokers offer a wide range of services and personalized investment advice, but they also charge higher fees. Discount brokers, on the other hand, offer a more limited range of services and lower fees, but you may have to do more of the work yourself. Ultimately, it’s up to you to decide which option is the best fit for your investment goals and needs.

List of Services Provides by Full Service Brokers

Full-service stock brokers typically offer a wide range of services to their clients, including:

  1. Investment advice: Full-service brokers often have a team of financial advisors who can provide personalized investment recommendations based on a client’s financial goals, risk tolerance, and investment horizon.
  2. Financial planning: Full-service brokers may offer financial planning services, including help with creating a budget, saving for retirement, and managing debt.
  3. Asset management: Some full-service brokers offer asset management services, which can include designing and implementing a customized investment portfolio for a client.
  4. Trading: Full-service brokers typically offer a range of trading options, including the ability to buy and sell stocks, bonds, mutual funds, and other securities.
  5. Research: Full-service brokers may provide access to research and analysis tools, such as market reports, financial statements, and stock recommendations, to help clients make informed investment decisions.
  6. Education: Full-service brokers may offer educational resources, such as webinars, seminars, and tutorials, to help clients learn more about investing and financial planning.
  7. Insurance: Some full-service brokers also offer insurance products, including life, health, and property insurance, to help clients protect their assets and financial well-being.
  8. Mutual funds: Full-service brokers may offer a range of mutual fund options, including index funds, actively managed funds, and exchange-traded funds (ETFs), to help clients diversify their investment portfolios.

It’s important to note that full-service brokers typically charge higher fees for their services, which can include commissions on trades as well as annual or monthly fees.

Discount brokers typically offer a more limited range of services compared to full-service brokers. Here is a list of services that may be offered by discount brokers:

  1. Trading: Discount brokers typically offer the ability to buy and sell stocks, bonds, mutual funds, and other securities at a lower cost compared to full-service brokers.
  2. Research and analysis tools: Discount brokers may offer access to research and analysis tools, such as market reports, financial statements, and stock recommendations, to help clients make informed investment decisions.
  3. Educational resources: Some discount brokers offer educational resources, such as webinars, seminars, and tutorials, to help clients learn more about investing and financial planning.
  4. Trading platforms: Discount brokers may offer online or mobile trading platforms that allow clients to place trades and monitor their portfolio.
  5. Mutual funds: Discount brokers may offer a range of mutual fund options, including index funds, actively managed funds, and exchange-traded funds (ETFs), to help clients diversify their investment portfolio.

Why Active Traders prefer Discount Brokerage over Full-Service Brokers

Active traders are individuals who buy and sell securities frequently, often using strategies such as day trading or swing trading. These traders typically prefer discount brokers over full-service brokers for a few reasons:

  1. Lower fees: Active traders often make many trades in a short period of time, which can result in high commissions if they use a full-service broker. Discount brokers typically charge lower fees for trades, making them a more cost-effective option for active traders.
  2. Advanced trading platforms: Many discount brokers offer advanced trading platforms that are designed for active traders. These platforms often have features such as real-time quotes, charting tools, and advanced order types that can help active traders make informed decisions and execute trades quickly.
  3. More control: Active traders often prefer to make their own investment decisions without relying on the advice of a financial advisor. Discount brokers typically offer more control to clients, allowing them to make their own trades without interference.
Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in)

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32 Replies to “Understanding Discount Brokers in India”

  1. Hi,

    Request you to please Add Commodity chart for Copper,Lead,Zinc,Aluminium,Nickel.

    Soyabean and chana have very less voulme…

    Regards.

  2. In my view these so called full service brokers are good for nothing. In fact, I consider them daylight robbers. This is based on my personal experience. They do come to our home for opening a/c. But if we are think they will give us best of their services and we will be able to generate profits with them. Then it is 1000% wrong. They are just bothered for their brokerage nothing else. They will give leverage for intra day trading with huge volumes (in options). But this is purely for their benefit. Once they come to know that, your pocket is about to become empty, then they start showing their real colours.

    Never ever think of going for these daylight robbes. Best thing is aquire requisite knowledge, have basic tools then have account with Discount broker and trade on our own.

    1. @OSK,

      It you want to trade on your own and looking for reducing your breakeven level then its better to stick with discount brokers. And if you are looking for multiple products like mutual funds, stock delivery, bonds then in that case full service brokers come into the picture. But for the trading sense your breakeven will increase dramatically with full brokers

  3. hello traders,

    i also disagree with the daylight robbers as full service offering brokers. dont lose money without knowing technical analysis basis knowledge. this information is my own experience. in the market first your side knowledge is the main thing. dont go for tips, brokers advices, etc., where the technical tools are to offered by free of service they are called as discount brokers. the give a chance to know the market basics and how to trade with TA setups. thats the right thing i also doing now. thank you reading for my comment .. do your best choise .. have a nice trader..

    1. @Subhash,

      The main aspect for brokers is get the people involved with the trades. And where many common people who are new to stock market sometimes get in trap of some wrong broker advises as these people mostly depend on their
      advises. Only mature traders in india are looking for discount brokers as most of the common people it takes some time to understand the brokerage structure and their breakeven margins.

  4. Both provide equal level of security for investor’s money in accounts as brokerage is highly regulated business. Both are at par in eyes of Sebi or stock exchanges like NSE, BSE. It’s not like discount broker will run away with your money and full service one will not. Money is equally safe with both.

    Above is all what I was looking for. Who needs tips from brokers, anyway.

    In conclusion, discount brokers are equally good. They save you money.

  5. First thing day trader with large volume never use the full service brokerage house bcoz they eat all your money . My experience with icici.direct is same but uncle kitchen always rock.
    thanks for good post.

  6. hi rajandran i want to know Are discount brokers company also take brokerage on penny stocks for eg if i buy 50000 shares of XYZ company at 0.10 paise than sharekhan type companies will make 5 paisa brokerage on each share .

  7. Hi there, very nice comment, I am trading with RKSV, I just wanted to know if I can confirm that my money is safe with this broker house, as I am planning to invest a huge amount into it. Can you please guide me as to how I can find out that it is really safe.

  8. ARE THE BROKERAGE SAME FOR 0.10 Rs. stocks from discount brokers.
    i am looking for opening an A/c with smarttradeonline.
    can u share ur experience for which one to go with?
    Sir one think i whould like to know if for e.g. a broker goes bankrupt or unable to fulfill their daily cost so in that case what whould be our safety for both shares in CDSL and most importantly our amt or RS. which has been transferred for purchasing shares or for eg. sold shares worth Rs. 50 lkh now which is with Borker . IS THERE ANY SAFETY MEASURES TAKEN BY SEBI OR GOVT.
    Sir will like ur comments regarding this as i am new…

  9. Article says – “Max brokerage (by al type of l brokers) can not be higher than 2.5% (see sebi site for actual details) of trade value.”.
    That means the companies (ShareKhan, RelianceMoney etc.) that are charging minimum per share brokerage are violating that rule in case of penny stocks. In many case they would be charging you more than 100% brokerage. There are many shares that have got reduced down to 5 paise (some even went down to 2 paise) per share. If you are purchasing these penny stocks, you will be paying more than 100% brokerage (RelianceMoney charges even 7 paise/share for basic customers).

  10. In my experience, if you are an investor with a view to hold a stock for a minimum of 1 or 2 or more years and sell with a 15-30% or more gain, then it would be okay to go with Full service brokers , as there as some benefits.
    But if you are a trader who knows a bit of technical analysis and if you do a single trade in 10 , 20 or more Lakhs , discount brokers is the best suitable. Image the saving, for NRI’s, the full time brokers charge 1% of the value of each buy or sell , so for a stock when you buy and sell, 2% of the total amount will disappear as brokerage , where as you have to give only Rs 40 ( 20+20) to a discount broker. Service and customer support is the same . But for NRI’s who wish to move to a discount broker, first check with your Bank if the discount brokers deals with them and get their go ahead .

  11. Thank for your suggestions on broker. . Is it possible that broker like zerdha run away with my money in trading account

    1. first of all…it is zerodha….and they can not cause they don’t have option to withdrawal…if they do also..as per SEBI rule they can place a with drawl request only to the linked account which is yours …

  12. when u have 5 rupees pocket es in your .and you didn’t have food for last 2 days…what do you except?or a place where you can get enough food to quench your hunger with a testy food right…and we i.e 80% of traders if we save 500 rupees per day,after doing all the need fulls..we will be very much happy…then what is your point to say that when I can save 90% of our brokerage as a NSE<BSE<MCX trader WITH DISCOUNT BROKERS…why are you trying to convince that can traditional brokers are better….Come-on You see the result or I can say revolution…by the decision of HSBC retail brooking and IIFL..sorry to ask that…how much do u get as a Authorized Person of a traditional broker?do not work for money sir…

  13. Dear
    What is ur opinion about wintrader.in. Today I saw thier website. They are offering 10x leaverage in intraday trading in mcx. Is it a scam? They are sebi registered broker?

  14. i think rksv nd zerodha will not run away with our money as they are sebi registered … second thing , all the big big brokers like angel , sharekhan etc etc gives us tips just bcoz of their profit …. no tips or no technical charge gives u any idea about intraday trading … its ur own research who gives u right ideas …

  15. This is the most bullshit and Absurd comparison I have seen between two product offering firms.

    I personally have been traded using ICICI Direct, Reliance etc etc and likes as RKSV and ZERODHA, I find these low brokerage much better than these so called Biggies. They answer your call within 30 secods Guaranteed but you have to wait in these biggies.

    And there is huge huge price difference.

  16. Discount brokers are the flair of the day. Most high value traders are finding it cheap and using them to lower their breakeven while trading. I thnk it is going to change the trend in the Industry.

  17. I think full service brokers are of no help for traders with small trade volume, as they will be least interested in them due to low brokerage. Further the suggestions gives by them are not always reliable, as they suggest only the stocks on which they can earn more profit due to their high price.

    If you have knowledge of stock market and can perform analysis & research, it is better to stick with the discount broker in India. Online discount stock brokers like My Value Trade not just offer the cheapest brokerage fees, but also offer easy to use trade portal. Even a beginner can easily understand and trade with an ease.

  18. Dear Rajendiran Sir,
    I need to know what is the process for opening a new discount brokerage in india. ?
    Provide me some links.
    Thank you in advance

  19. I prefer discount brokers as they charge very less in comparison to full service brokers. And my favourites are Shoonya by Finvasia and Zerodha. I use Shoonya for intraday trading as it has 0 brokerage and Zerodha for long-term investments. Satisfied with both of them.

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