Today the stock broking business is not about just execution of trades alone. Today stock broking is all about smart stock trading and analytics. Does your broker provide you value added screeners that help you identify stocks to invest in? Does the broker provide you with customised solutions that are designed for you? Does your broker offer you products or does your broker offer you solutions? Does your broker offer you predictive analytics in stock trading? Are you able to use your broker’s online interface and evaluate how to predict stocks for next day, next week and next year? All these constitute the all-important analytics that a broker provides. Remember, discount brokers or zero-brokerage broker will only provide you with buying and selling (that is all). It is only full-service brokers with an established track record in research and analytics that can provide you with these valuable add-ons.
Let us understand the significance of a value-added broker by taking the example of buying a shirt. You know that you wear a 44 sized shirt, you like blue colour and you know your budget. The easiest thing is to go to the web and order the shirt of your choice. Alternatively, you go to a professional showroom. What is the difference? A typically reputed showroom representative will tell you about the quality of the cloth, how it should be washed and how it should be ironed. He will also tell you why it is important for your sleeve to be seen up to ½ an inch outside your jacket and why the shirt collar should be long enough to sit comfortably on your jacket mane. The representative will also tell you whether the particular colour will be good for informal parties, weekend wear, and formal wear or for appearing on live television. Extending this analogy, this probably reflects the difference between no-frills broking and a broker that provides you all the value-added analytics. In fact, stock trading and analytics are inseparable.
Some of the key analytics that brokers provide; else you should ask for them..
Ensure that you broker offers you a complete array of products. Well you do not just want a supermarket. You need products that suit your needs. Hence the broker has to begin with a financial plan. Today most brokers offer financial planning. Ensure that it is customised to your unique needs and it is user friendly and actionable.
Does your broker offer you robo-advisory? Robo advisory is a recent trend in financial services which combines the power of big data, domain skills and smart algorithms to give you smart solutions. Focus on a broker that has a long domain experience in the Indian market and is reputed for their research and depth.
Does your broker offer you genuine long term wealth creation plans? Short term trading ideas are available a plenty. But is your broker allowing you to generate wealth and also leverage on the ups and downs in the market. The Motilal Oswal Target Investment Plan (TIP) is a classic case that not only helps you to systematically create wealth but also guides you to get more aggressive when valuations are attractive. The Motilal Oswal Target Investment Plans (TIP) are a case in point where your SIP is constantly modified to change with valuations.
Does the broker offer you a high end-equity trading experience? Equity trading is not just about calls; that is not what you should be looking for. Equity trading is all about empowering traders with pivot points, trend turnarounds, technical charting facilities etc. Most brokers will provide you this facility but the more advanced the better.
Ensure that broker analytics on the derivatives are of the highest quality. Derivatives are not just about punting in the market. There are a lot of complexities like Put/Call ratio, OI accumulation, strike concentration. The analytics have to give you trading ideas based on all these variables. Additionally, you need to understand which options are underpriced and which options are overpriced.
Is your broker mobile-ready? This may be a slightly peripheral consideration but Indians are increasingly shifting towards the mobile platform to access the net. The broker analytics has to be robust enough to deliver the value-added content to your mobile. More important, the broker must adopt a push-approach than a pull approach.
As a trader you will have of very relevant questions. How to predict stock prices for the next day and for the future? How to use predictive analytics in stock trading? Remember, stock trading and analytics form a critical link between the investor and information. The beauty of analytics is that it collects all the information, and then separates the data from the noise, and then it structures this data into usable content and finally delivers what is relevant to you. That is the kind of analytics that your broker needs to provide.
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