The hunt for the best dealer for futures and choices buying and selling

The research highlights the rising curiosity of particular person buyers within the F&O phase ever for the reason that pandemic struck in 2020. Millions of individuals confined to their homes amid the lockdowns— and impressed by finfluencers—flooded the inventory markets looking for simple cash, regardless of the inherent dangers. Thus, a report 14.2 million new demat accounts have been opened in FY21, three-times larger than the earlier monetary 12 months. Most of them have been by DIY (do it your self) buyers who wished a bit of the F&O motion.

F&O buying and selling is a high-risk enterprise and new buyers, a lot of whom relied on on-line course subscriptions, suffered losses. Market specialists say you will need to rent a superb dealer in the event you resolve to dabble within the F&O phase. But, choosing the proper dealer shouldn’t be a straightforward affair both. For one, there are a lot of brokers at the moment providing aggressive brokerage. Also, low cost brokers alone used to hitherto supply flat brokerage, now even full-service brokers try this. Discount brokers are stockbrokers who perform purchase and promote orders at a decreased fee price. Unlike full-service brokers, they don’t present private consultations, monetary recommendation, tax planning, or analysis and evaluation.

Brokers at the moment additionally supply a spread of options resembling possibility technique, API (utility programming interface) for commerce automation, superior possibility chain, and many others. You have to search for brokers who can supply the most effective options in your buying and selling necessities. Do be aware of buying and selling glitches within the software program supplied by brokers.

Mint speaks to some F&O merchants for his or her perception on how they make the most of the service of brokers.

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Discount brokers

Bengaluru-based Sandeep Rao, 43, a fintech govt, says he has had an account with brokerage agency Zerodha since 2011. Rao, who has been buying and selling within the F&O phase by way of Zerodha for the final 10 years, loves the agency’s clean UI (person interface) and entry to the Zerodha ecosystem.

Another benefit with Zerodha is the MProfit monitoring app which permits one to trace investments throughout completely different property and platforms. “As Zerodha is among the buyers in MProfit, it’s well-integrated into the system,” he says. Rao says he is sticking with Zerodha for the reason that he has also built a sizeable investment portfolio with the broker over the years

Yet, Rao says there are a few things about Zerodha that he hates. For instance, the firm charges ₹2,000 per month for its API (application programming interface), which is usually used by traders for automation of their trading strategies. “While Zerodha’s API is reliable, most brokers today don’t charge any additional fee for API,” he says.

He cites the instance of Dhan, which doesn’t cost for the API. He makes use of Dhan often as a back-up for buying and selling. “I like Dhan because it retains including progressive options after getting suggestions from merchants. But the software program it makes use of will must be optimized.”

Rao says that he has confronted some software program glitches even on Zerodha, however fortuitously he has not needed to face any losses due to that.

Mumbai-based Vijay Batra, 24, has simply began buying and selling within the F&O phase. A monetary providers skilled, Batra has opened an account with Upstox. He initially used the account for investments however began utilizing it 5 months again for F&O buying and selling.

Batra, who says he has to this point not confronted any main challenge on the platform, is a fan of the low brokerage it expenses and its person interface. To ensure, Upstox customers have additionally confronted software program points previously.

Full-service brokers

Pune-based Tushar Karmakar, 27, has tried a number of brokers within the latest previous. He began utilizing Zerodha for F&O buying and selling in 2020, however after some restrictions on buying and selling in out of the cash, or OTM, contracts (OTM contracts are these which are farthest from present index ranges), he shifted to Upstox. When he confronted points with accessing the Upstox account for buying and selling on Budget day, he moved to Fyers. He used the dealer until October 2022 when he confronted hurdles in putting orders from his account. He claims that there have been delays of 5-7 seconds even for an order modification.

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Karmakar, who has since shifted his loyalties to Kotak Securities, says he’s in awe of the Kotak Neo cell app and makes use of it to key in most of his buying and selling orders. “I like their person interface, and the general expertise has been good. Also, I’ve taken zero brokerage plan in Kotak Securities,” he says.

At Kotak Securities, investors below 30 years of age can opt for the Trade Free Youth Plan for an initial two years. They need to pay ₹499 for the first two years, which offers zero brokerage across segments. Traders also have to bear an annual account maintenance charge of ₹600. After two years, they are moved to the regular Trade Free Plan, which is open for all. Here, a flat fee of ₹20 is applicable per order in the F&O segment. Karmakar adds that he faced software glitches at Kotak Securities soon after opening his account (in December last year) but didn’t suffer any losses.

Mumbai-based Tulika Mall, 32, is a full-time trader in the F&O segment for the last three years. She uses ICICI Direct’s platform to place her trades and is very happy with its low-brokerage fee. She has subscribed to both ICICI Direct’s Neo and Prime plans, and pays ₹20 per lot in brokerage.

As a full-service broker, she has access to the relationship manager (assigned to her due to multiple family accounts and large volumes) as and when required. She claims to have faced order lags in the broker’s software, but doesn’t mind it for now. A well-established financial services brand and a personal RM, just a call away, matters. “We are trading with huge volumes of money. So, brand comfort is equally important for us,” Mall says.

Mall says she goes by way of the brokerage’s analysis studies emailed to her for actionable perception if any inventory piques her curiosity.

What to think about

Trading in F&Os shouldn’t be appropriate for everybody. It requires each massive capital and deep understanding of how F&O pricing works.

Those searching for brokers to commerce within the F&O phase ought to examine for studies of frequent glitches within the software program utilized by the dealer. It shouldn’t be unusual for such glitches to happen particularly on large occasion days (resembling throughout the Union price range, elections) when market buying and selling volumes are excessive. If you may’t exit a place together with your main dealer on the proper time on account of a software program challenge, it will possibly flip your earnings into losses or restrict your skill to reduce losses on an already loss-making place.

Having a secondary dealer is perhaps helpful as nicely. For instance, you may place a counter commerce with the secondary dealer to hedge towards the place in your main dealer.

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Updated: 03 Jul 2023, 09:51 AM IST

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