Zerodha has set an example for other stock brokers by charging very low brokerage to its clients along with the transparent environment they provide. Other conventional stock brokers tried to imitate the brokerage model but they failed because cost of their own infrastructure and employee’s salary didn’t allow them. Finally they retuned back to their own model. This article provides complete guideline on zerodha account opening.
If you are new to zerodha term, you can read this article thoroughly, otherwise feel free to fly through the below links and jump to your preferable section.
- Stock market
- Stock Broker
- Full-service broker
- Discount broker
- Zerodha Stock broker
- Trading Account
- Demat Account
- Open Account on zerodha
- Types of account at zerodha
- Fee for zerodha account opening
- Why you should open an account with zerodha
- Why you should not open an account with zerodha
Are you paying very high brokerages to your stock broker? If that is the case then you are going to admire zerodha because it charges one of the lowest brokerage for security derivatives in India. Its brokerage model is straight forward Rs 0 (zero) for delivery and Rs 20 (twenty) or 0.01% whichever is lower for intraday. FundsBase has provided a detailed review on zerodha to help you decide whether you should open zerodha account or not.
A stock market can be defined as a hub of buyers and sellers of stocks, listed on registered stock exchange. Companies list their stocks on a registered stock exchange. These stocks are made available to public on primary and secondary market to generate funds for their business. Stocks are then bought and sold by public as per the rules and regulations of a regulatory authority. In India Securities Exchange Board of India (SEBI) is the regulatory authority and it makes sure that stock market runs as per the established laws.
Buying and selling of a company’s stock needs a buyer and a seller on a registered stock exchange. If both of these buyer and seller agree to settle for a price, stock is exchanged. Means the stock is sold by the seller and bought by the buyer for the price they both agreed. This is a mutual agreement by both. This seems a complicated task because for buyer its hard to find a seller who is willing to sell the stock at a price he wants to buy. In the same way for a seller its tiresome to find a buyer who is willing to buy the stock at a price he wants to sell. Here comes the very important role of a broker who provides a platform and let the buyer and sellers find each other. A broker helps to exchange the stock ownership and eases the complicated process of buying and selling security derivatives. This ease of exchange is provided by charging a fee which is called brokerage. Both buyers and sellers pay this brokerage to avail the various services a broker provides.
In older days stock market was seen as a hobby of riches to make some use of the money they had because –
- There were lots of myths and fears regarding stock markets, screaming out in the brains of rest of the world. Most of these myths and fears were created by the ones who were already trading in stock markets. So that unknowns may not enter the market and disturb their trading plans. These myths were rooted so deeply that it kept on spreading to generations. FundsBase is glad that it has busted these myths and fears successfully.
- Stock market requires a broker. In older days a brokers used to charge very high brokerage due to the span of financial services they provided viz. trading tips, money management, tax filings, investment advices et cetera. These all services were packed in single service package called brokerage of the full-service broker. Obviously not everyone interested in stock market needed all those services exempli gratia, no one needed money management services. They also didn’t want to pay some one to file their tax returns. With temporal advancements some brokers realized that not everyone needed all these services thus they removed some services and provided these rebuilt packages to the public. Still, trading tips were part of these packages. People found these packages worth trying and started trading by paying the pre-defined brokerage to the brokers. These brokers were still called full-service brokers
In 2010 a fresh advancement was brought to stock market. SEBI introduced the phenomena of discount brokers to the stock markets of India. SEBI wanted more people to become aware of the benefits of stock market and start trading. It realized that not everyone requires additional services from a broker except a platform for trading in stock market. This realization led to the introduction of discount brokers in India. A discount broker provides minimal services for stock market and thus reduces its brokerage. India loved the introduction of discount brokers and since then trading in stock market has increased exponentially.
Zerodha Stock broker
In 2010, Nithin Kamath a full time trader for more than a decade, saw the opportunity given by SEBI and started the initiative called zerodha on 15 August 2010. In his own words, he had faced lots of hurdles while trading thus wanted to introduce something obstruction free for its clients. He started this something by visualizing the name of his obstruction free project.
Zero + Rodha (means “obstruction” in sanskrit language) = Zero Rodha = Zerodha
Brokerage Model of zerodha is straight forward. Rs 0 (zero) for delivery and Rs 20 or 0.01% whichever is lower for intraday. This new brokerage model seemed to be impractical for the conventional stock brokers and traders too. Know more about zerodha brokerage charges. To understand zerodha brokerage with more simplicity and with example see here.
Zerodha was an impractical project at start and was not supposed go long, but today zerodha has 5+ lakh traders and is fastest, top volume contributors on NSE, BSE, MCX-SX and MCX, with average daily trading turnover of over ₹10,000 crores.
Its fascinating, right!
Zerodha provides technically advanced platforms for trading. These are Kite for browser, mobile app for android and ios, a powerful full fledged standalone software for windows called Pi. Zerodha offers several add ons which makes it more lovable.
You must be having a bank account, right? If internet banking or card is mapped to your bank account, you can shop directly from your bank account. If you understand this process then you will understand the phenomena of a trading account as well,
See stock market as an online shopping place where various companies have put up their stock to be bought and sold. But you can’t make purchased of these stocks directly from your bank account because you need a broker who let you meet the correct buyer-seller of stocks. These brokers provide an account where you can put your money to buy-sell stocks. It’s similar to a bank account but restricted to buy-sell stocks of a company listed publicly on a registered stock exchange.
You need to have a trading account with a broker so that you can add funds in your trading account and buy-sell security derivatives (includes stocks, commodity, currency and other derivatives).
Let’s understand a demat account with the help of an example. You must have seen whole sellers and retail sellers of goods in your nearby home or somewhere else. A retail seller has everything in his shop he needs to sell whereas a wholesale seller has a godown as well. In this godown he keeps all the goods he will sell tomorrow, next week or next month.
Consider your demat account as a godown for your stock, you have bought to sell in future. This future starts from three days after buying stock to anywhere in future. This future selling of stocks is called delivery. To keep these stocks somewhere safely so that you can find and sell them whenever your feel to do so, a demat account is required. India adopted storing stocks and other security derivatives electronically in 1996 after introduction of depository system by depository Act 1996. This electronic storage eliminated the paper form of stocks and other security derivatives. Demat is an acronym of Dematerialised.
You don’t need a demat account in case you do only intra-day trading. For more on delivery and intraday you can read here.
Open Account on zerodha – Trading and Demat Account
You can go directly to zerodha website and start your zerodha account opening process.
Documents required to open account at zerodha
- Pan card
- Address proof
- Cancelled cheque
- Income Proof (for F&O)
Types of account at zerodha
- Trading account for equity and currency derivatives.
- Demat account to take delivery of stocks.
- Commodity account to trade commodity futures on MCX.
Fee for zerodha account opening
- Equity & Demat: ₹300
- Commodity: ₹200.
- If you want the forms couriered to you, an extra fee of ₹100 shall be charged.
There are two ways you can open your account.
- With Aadhar card
- without Aadhar card
In both these methods you need to courier some documents to zerodha office in Bangalore. In case you choose “with Aadhar card”, you will have to send less documents as you would have already given your much needed details online. So I suggest you should use Aadhar if you have one. In any case aadhar is going to be mandatory in India.
When you go to zerodha account opening page you fill your Name, email and mobile number. After that you can either continue to sign up or may opt for a zerodha representative to call you back for detailed sign up procedure.
Why you should open zerodha account
- One of the lowest brokerage model – Rs 0 for delivery and 0.01% or Rs 20 whichever is lower for intraday.
- Most advanced platforms for trading
- 60 day challenge. Be profitable for 60 days and get your brokerage waived off for that period.
- Be profitable for 90 days and get listed as a star. Earn by revealing your trading style to other zerodha clients.
Read more reasons at why you should choose zerodha.
Why you should not open zerodha account
- Pi is available for windows only. No installation for Linux and mac users, Still you can use zerodha kite.
- You want trading tips from your broker
Read more reasons at why you should not choose zerodha.
Zerodha, which was started in August 2010, in a very short span has achieved huge success only because of its simple, straight forward low brokerage model. This is Rs 0 for delivery and 0.01% or Rs 20 whichever is lower for intra-day. Apart from this, zerodha offers advanced trading platforms for desktop as well as for mobiles. Add ons provided by zerodha are also one of the reasons for its huge client base. There is practically no reason why you should not open an account with zerodha.