Chapter 7- Trading Options – Brokerage Houses
We have understood the basics; we have taken the time to get used to Market and Trading Terms. Now is when we want to take the plunge and start experiencing ourselves. To do so, one would need to start trading. To “trade” means to buy and sell securities from any of the Exchanges. There are two basic ways exchanges execute a trade:
(a) Exchange Floor (through normal brokers)
(b) Electronically (through online brokers)
Our recommendation – Maximus Financial Services Pvt. Ltd. ! They help you opening an account and also give you a 3 month Free subscription to their Terrific Stock Pick of the week newsletter! MaximusFinance.com helps you open an online Demat Account within no time. MaximusFinance.com is also known well for its regular weekly Stock Picks (sent as email newsletters to subscribers of the service). Check out their website for more details !
Most people already have an idea of what Trading on the floor of a Stock Exchange (BSE or NSE) is like, thanks to television and the movies. When the market is open, you see hundreds of people rushing about shouting and gesturing to one another, talking on phones, watching monitors, and entering data into terminals. It could not look any more chaotic.
Here is what a typical sale would work like on the Exchange Floor. You tell your broker to buy 100 shares of Reliance Industries at market. Your broker’s order department sends the order to their floor clerk on the exchange. The floor clerk alerts one of the firm’s floor traders who locates another floor trader willing to sell 100 shares of Reliance. This is easier than is sounds, because the floor trader knows which floor traders make markets in particular stocks. The two agree on a price and complete the deal. The notification process goes back up the line and your broker calls you back with the final price. The process may take a few minutes or longer depending on the stock and the market. A few days later, you will receive the confirmation notice. Of course, this example was a simple trade, complex trades and large blocks of stocks involve considerable more detail.
Slowly more and more trading is moving to the online networks and off the trading floors. There are online brokers like SSKI(ShareKhan), ICICIDirect, KotakStreet, 5Paisa.com & IndiaBulls. Once you have an account with any of these Online Brokers, you will be able to invest online and be able to watch and monitor and manage your portfolio with ease. BSE does some part of its trading Electronically, NSE is supposed to have a much bigger % of its trading online.
The electronic markets use vast computer networks to match buyers and sellers, rather than human brokers. While this system lacks the romantic and exciting images of the floor, it is efficient and fast. Many large institutional traders, such as pension funds, mutual funds, and so forth, prefer this method of trading.
Depending on whether you are more comfortable in trading over the phone by talking to Brokers, or whether you like to get into yourself and are more comfortable in ordering online yourself through Online Brokerage companies, you can select from amongst the following. The Brokerage companies and banks listed below are not an exhaustive list of available options, they are just a few names to get you going. As you stay longer in the market you will be able to figure out more and be able to decide on any other firm if you so desire.
Some More Online Brokerage Firms, apart from MaximusFinance.com :
1. S S Kantilal Ishwarlal Securities Pvt. Ltd. (www.sharekhan.com)
From their website – “Sharekhan is an equities focused organization tracing its lineage to SSKI, a veteran equities solutions company with over 8 decades of experience in the Indian stock markets.
Sharekhan is about Focus. Sharekhan does not claim expertise in too many things. Sharekhan’s expertise lies in stocks and that’s what he talks about with authority. So when he says that investing in stocks should not be confused with trading in stocks or a portfolio-based strategy is better than betting on a single horse, it is something that is spoken with years of focused learning and experience in the stock markets. And these beliefs are reflected in everything Sharekhan does for you!
To sum up, Sharekhan brings to you a user- friendly online trading facility, coupled with a wealth of content that will help you stalk the right shares. ”
2. ICICI Direct (www.icicidirect.com)
From their website – “ What so unique about ICICIdirect.com?
The Unique 3-in-1 account that gives you !
Convenience: the 3-in-1 account integrates your banking, broking and demat accounts. This enables you to trade in shares without going through the hassles of tracking settlement cycles, writing cheques and Transfer Instructions, chasing your broker for cheques or Transfer Instructions etc.
Speed: You can now get the latest quotes of scrips on ICICIdirect.com and place an order almost instantly.
Control: You can be assured that you have in fact placed an order at the price you always wanted to, but may not have been able to do so till now. Thereby giving you control over your own trades.
Independence: Instead of transferring monies to a broker’s pool or towards deposits, you can manage your own demat and bank accounts when you trade through ICICIdirect.com. Trust: ICICIdirect.com comes to you from ICICI, the organisation trusted by millions of Indians.”
3. Kotak Securities Ltd. (www.kotakstreet.com)
From their website – “Kotak Securities Ltd., a strategic joint venture between Kotak Mahindra Bank and Goldman Sachs (holding 25% – one of the world’s leading investment banks and brokerage firms) is India’s leading stock broking house with a market share of 5 – 6 %. Kotak Securities Ltd. has been the largest in IPO distribution – It was ranked number One in 2003-04 as Book Running Lead Managers in public equity offerings by PRIME Database. It has also won the Best Equity House Award from Finance Asia – April 2004.
The company has 42 branches servicing around 1,00,000 customers. Kotakstreet.com the online division of Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual Fund Investments. Kotak Securities Limited manages assets over 1200 crores under Portfolio Management Services (PMS) which is mainly to the high end of the market. Kotak Securities Limited has newly launched “Kotak Infinity” as a distinct discretionary Portfolio Management Service which looks into the middle end of the market.”
4. IL & FS Investmart (www.investmartindia.com)
From their website – “Your world of financial services and India’s financial multiplex, IL&FS Investsmart Limited (IIL) is a premier financial service organisation providing individuals and corporates with customised financial management solutions. We work towards understanding your financial goals and helping you attain them. Our institutional expertise, combined with a thorough understanding of the financial markets results in appropriate investment solutions for you. At IL&FS Investsmart, we recognise that your dreams, needs, aspirations, concerns and resources are unique. This is reflected in every move we make with and for you. We have a deep appreciation for the value of building a long-term partnership with you.”