There is no
denying the fact that online trading has entered India with a bang and is here
to stay. Even the small and medium scaled broking firms of the country want to
ride the wave and are ready to make a fortune out of the market place concept.
A few years ago, only a handful of online brokers were in business. Today,
maximum stock firms are competing for online trading business. This growth in
the number of online brokers is due to the growing popularity of this platform
of trading. Today, at a click of button investors can trade anytime and
anywhere from their tech-savvy gadgets and mobile phones.
Given the popularity and anticipated
growth of online trade, we see online brokerages are facing stiff competition
Indian market.
With the increasing number of brokers
in the market the competition is getting bigger and stiff. Full service firms
have become increasingly interested in capturing business from their online
rivals. This phenomenon is creating a huge amount of competition among online
brokers and is driving commission levels to rock bottom. Some brokers are now
offering free trades, concessions, slashed maintenance charges to lure the
customers.
While the competition from all of
these competing firms is making things more difficult for online brokers, there
is also evidence that the growth in online trading is leveling off. With the
increasingly competitive environment and the slower overall growth in online
trading activity, brokers compete for market share by using various strategies.
For many brokers, the key to success is adopting a combination of both online
and traditional brokerage services. Apparently, many investors feel more
comfortable opening accounts and bringing in assets when there is face-to-face
contact.
A number of brokers are adopting
strategies that use both online trading and traditional brokerage services to
lure new accounts. Other brokers are competing for market share through
technology and the rise in online trading in worldwide markets.
Active traders are always an important
part of the investment population. Experienced investors require little need of
advice. They prefer a broker with low costs and exceptional execution
capabilities. So, the strategy for many web brokers is to maintain a focus on
low transaction costs and superior trade execution to attract more accounts.
Investors and share traders will
eventually figure out the type of broker best suited to meet their needs. An
active trader is unlikely to find much value in being able to visit a branch
office and chat with a stockbroker. A relatively knowledgeable trader will
probably have a thorough understanding of financial markets and investment risk
and not require meeting a stock broker face-to-face. In reality, the active
trader will look for low cost broker with a focus on getting the best prices on
customer orders. Therefore, as an investor, when evaluating various brokers,
the most important factor to consider is whether or not the broker focuses on
those factors that are going to add value for you and your particular trading
style.






