How to do online Trading

Almost all brokerage houses offer online trading. For online trading, you have to know 5 things:-

1. Brokerage rates: You need to get low brokerage for both delivery based trades, and also for intraday and F&O trades. If you're an intraday or derivatives trader, brokerage and other transaction costs (STT, service tax etc) can take away a substantial portion of your profits.

2. Exposure and margin funding: You need to know, how much exposure you will get based on your DP holding and the cash you're ready to put up. Brokerage houses will give you many times the exposure on your margin (stocks + cash - haircut), but you also need to know how much interest they will charge you, if you do not settle in time. For example, if they charge you a 20% interest, like many of them do, it will take away a substantial portion of your profits, if you're not able to settle by T+3.

3. Research and calls: You should also check with the brokerage house, the calls they provide for intraday, positional and long term trades. You should check, the track record of the brokerage house. Given the volatility in our market, you've to pay attention to stop losses as well. In our kind of market, it's very difficult to say, which online brokerage called the best, ICICI Direct, Kotak Securities, Motilal Oswal, India Infoline, Sharekhan, Anand Rathi, Angel Broking etc. Check with your peers who've traded with different brokers. There's no one size fits all solution here. I may have a bias towards a particular broker, somone else, may have a different opinion.

4. User interface: The user interface is extremely important, when you place trades. The kind of information they provide and the ease of trading are very important factors. The user experience, whether you are placing market orders or limit orders, is of critical importance to your success as a trader. Again here, it's difficult to say, which platform is the best. The best platform is what suits you the best. You should check out ICICI Direct, Kotak Securities, Motilal Oswal, Angel Broking, Anand Rathi, India Infoline, Sharekhan etc and then decide accordingly.

5. Offline support: There will be times, however rare, when you can't place orders online. Offline support is very critical under those circumstances. Will you be able to place your orders on the phone? What kind of support you will get, under those circumstances, is also vey important.

Many brokerage houses offer very good deals on prepaid brokerage. But your objective is to make money, therefore unless you're an expert trader the other factors come into play. In our opinion, good research, both technical and fundamental, is a more important factor than low brokerage rate. Margin funding interest is another important factor for short term traders. As far as trading interface is concerned, as discussed, a number of brokers provide excellent user interface. You need to see for yourself, what suits you the best.