To top it off, the investing process has been made easier with plenty of feature-rich trading and investment apps to choose from. For instance, stock brokers like Lemonn and Zerodha offer zero brokerage trading accounts, the perfect cherry on the cake.
Understanding zero brokerage
Zero brokerage is a pricing model in stock market trading in which brokers do not charge commissions or fees for executing trades. However, brokers generate revenue via brokerage fees. Therefore, platforms that offer zero brokerage trading accounts are hard to find. This is where trading and investment apps like Lemonn, which offer zero brokerage for a year, stand out. But let us understand the different types of brokers first.
Different types of brokers in India
A broker is essentially an intermediary between traders and stock exchanges, enabling the buying and selling of stocks. Here are some of the major categories of brokers in India.
Traditional or full-time brokers
Traditional brokers offer bespoke, personalized portfolio management services, not just trade execution. However, they are known to charge steep fees, making them unsuitable for short-term traders who bank on price fluctuation in a single-day trade to make profits. Yet, traditional brokers are popular among high-value investors and institutional investors who prefer the exclusive services provided by traditional brokers.
Discount brokers
Discount brokers, popularly known as online stock brokers, are cost-effective and cater to investors of all sizes. Thanks to low commissions and fees and their user-friendly interface, discount brokers are popular with traders. Lemonn belongs to the broad category of discount brokers, which includes the zero brokerage model.
Jobbers
Unlike traditional and discount brokers, jobbers are brokers who participate in the stock market for their own sake. Also called market makers or dealers, they play an important role in maintaining market liquidity. A jobber profits by quoting two prices on stocks, one for buying and the other for selling. Unlike brokers, jobbers can trade in their name and are not allowed to facilitate trades in the stock market on behalf of others.
Arbitrageurs
Prices are not uniform across different brokers for buying and selling stocks. In the equity market, price differences are common, and investors leverage this. However, there is another type of broker called an arbitrageur, whose entire trading strategy is based on the price difference. Arbitrageurs purchase securities from one broker and sell them at a different price with a different broker or stock exchange, profiting from the price difference.
Impact of the zero brokerage model
Zero brokerage trading has transformed the stock market landscape drastically. Let’s look at some of its notable impacts:
Encourages investor participation
The zero brokerage trading account is accessible to all investors, unlike other brokerage models, such as traditional models. From creating an account to executing trades, zero brokerage is investor-friendly, encouraging traders to participate in stock market investing.
Cost-effective
With zero brokerage or low commission, investors can keep all their profits from their trade. This promotes frequent trading among intraday traders who bank on modest profits in a single-day trade.
Promotes healthy competition among brokers
As stock market traders are drawn to discount brokers with zero brokerage, traditional brokers are compelled to up their game to retain their clientele. Traditional brokers are reducing brokerage fees while offering the same repertoire of services, which benefits investors and the overall market.
Digital transformation
Zero brokerage trading apps generally operate via online platforms, leveraging technology. This has simplified trading as easy-to-access and user-friendly trading apps redefine stock market investing.
Impact of Lemonn zero brokerage model
Despite the availability of multiple stock brokers in India, the zero brokerage model is relatively rare. Lemonn, a relatively new entrant in the stock broking space, has launched zero brokerage as an introductory offer for a year.
Economic impact
In addition to the zero brokerage offer for one year, Lemonn also does not charge any account maintenance fee and zero charges for opening an account. So, traders of all levels, especially new traders with limited funds, can opt for Lemonn, and the profits they make are entirely their own, with zero commission.
Risk management
A well-established risk management protocol is essential for any online trading platform. Lemonn offers a seamless platform for users and provides a curated basket of stocks in a price range that is affordable to all based on varying needs and risk appetites.
Competitive fees
When it comes to investments, saving even a rupee matters because it ultimately contributes to the overall profit margin. While many discount brokers offer low fees, only a few offer zero brokerage.
Tools that make trading easy
Lemonn offers instant access to analyst ratings, charts, and key metrics to help investors make sound trading decisions. For example, the app’s "Analyst Rating” feature uses financial market data from Refinitiv, making stock trading easy by providing Buy/Sell/Hold recommendations and exit price suggestions.
Offers sector-specific stocks
Lemonn offers a curated portfolio of stocks from diverse sectors, such as railways, electric vehicles (EVs), and automotive, as well as PSU stocks and high-dividend stocks. Investors can start investing in stocks via Lemonn with just ₹100.
Conclusion
Stock market trading can be tricky if you dive headlong first and try to navigate the market. We have given you a guided tour of the various options available for stock market trading in India to ease your investment journey. Different trading apps offer diverse features for potential investors. If you are a cost-conscious investor who also needs some handholding, the zero brokerage trading account from Lemonn could be a good option.
(This article is part of IndiaDotCom Pvt Ltd’s Consumer Connect Initiative, a paid publication programme. IDPL claims no editorial involvement and assumes no responsibility, liability or claims for any errors or omissions in the content of the article. The IDPL Editorial team is not responsible for this content.)
