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Zerodha Review

Zerodha Review

 

Zerodha is an established forex broker company in India.

Finding a reputable Zerodha review local or worldwide can be a difficult process, especially finding a complete list from a trustworthy reputable source.

Below is an in-depth review regarding Zerodha to help you make an informed decision before opening your account or trading on their platform.

According to research recently done, The broker aims to create a high-tech trading platform with affordable pricing. Its disruptive pricing models and in-house technology have made it the biggest stockbroker in India in terms of active retail clients today.

Over 2+ million clients place millions of orders every day through the broker’s powerful ecosystem of investment platforms, contributing over 15% of all Indian retail trading volumes.

Zerodha was founded in 2010 by Nithin Kamath and has headquarters in Bengaluru, India. The broker is regulated by India’s top-rated regulator, the Securities and Exchange Board of India (SEBI).

Kamath is the CEO of the company and was named one of the Top 10 Businessmen to Watch Out for in 2016 in India by The Economic Times for pioneering and scaling discount broking in India.

 

Awards and Recognition

In the world of forex broker companies, it counts much for the company’s reputation if it has been honored with awards from esteemed organizations or publications.

Zerodha has received the NSE, MCX Best Retail Brokerage award for two consecutive years 2018 and 2019.

 

Zerodha Accounts

A forex account is a trading account held by a trader with a company like Zerodha, that is issued with the primary purpose of trading through its platforms. The number and type of accounts that a trader can open with a broker company usually differ according to the country in which the brokerage operates, the country of residence of the trader, and the regulatory authorities under whose jurisdiction it operates.

 

Types of Accounts and Their Features

Zerodha does not offer clients the option to open a demo account in which to practice trading with. These accounts usually have a balance of virtual money that sport real-time prices and trading conditions.

Zerodha offers the choice between two account types but it is only on offer for residents of India:

 

  • Demat Trading account – for equity and currency trading
  • Commodity account – for commodity trading

 

The fees charged to open an account are Rs R200 for a Demat trading account and Rs 100 for a Commodity account.

If you want to trade in both equity and commodity, then you need to pay an account opening charge of Rs 200+Rs 100 = Rs 300. On the Demat account, an annual maintenance charge is Rs 300 per year.

The process to open an account can be started from links on the company homepage but it is not a fully digital process and it can take up to five days before the account is opened and ready to trade in.

The process is started with the clients supplying a telephone number and email address. As only residents of India can open an account the next step is to enter your Permanent Account Number and pay the opening fee.

You are then requested to link your identification details with the Online Government website which will pull all the required documents online.

Next, you need to upload your bank statement and provide a Webcam IPV (In-Person verification). The following documents need to be emailed to the broker, namely a photograph, Aadhar Card that is utilized from the Digilocker online website, Pan Card, and Bank Statements.

Only after you have been verified by Zerodha will you be able to fund your account and start trading.  Funding can only be done in the INR currency via a few payment methods.

 

Deposits and Withdrawals

Zerodha does not require a minimum deposit to open an account.

The following methods can be used to fund accounts or make withdrawals:

  • Unified Payment Interface (UPI), where funds are transferred instantly from your registered bank account for free.
  • Instant payment gateway (Bank Wire Transfer) where funds are transferred directly from the Kite platform using the instant payment gateway facility, which is charged at Rs 9 plus taxes. Clients can make use of one of the 25 banks listed on the website
  • IMPS/NEFT/RTGS transfer

It does not offer the option for credit or debit cards and no e-wallets are allowed.

To withdraw funds, clients must place a fund withdrawal request by logging into Console or from within Kite. This can only be done online and can take up to 24 hours to be credited to your account.

 

Cost and Fees, Commissions and Spreads

The cost of trading depends on different factors like commissions, spreads, and margins.

The spread of a currency pair is the difference between the bid and the asking rate. A pip represents the smallest increment that an exchange rate can move. One pip is 0.01 for currency pairs with JPY as the term currency and 0.0001 for all other pairs.

The amount of money required in your account to open a position is called the margin and is calculated according to the current price of the base currency against USD, the size (volume) of the position, and the leverage applied to your account.

Commissions are the charges imposed by an investment broker on a trader for making trades on the trader’s behalf. The level of commissions depends on the asset being traded and the type of service offered by the broker.

Execution-only brokers, which do not involve in personal investment advice and give traders complete control over how they trade the markets, usually charge lower commissions.

While the contract for differences (CFDs) trading is a form of derivative trading that enables traders to speculate on the rising or falling prices of fast-moving global financial markets, it’s trading on shares will incur commission. CFD trades on other markets have no commission but do wrap a spread around the market price of a certain instrument.

Zerodha charges a fixed brokerage of Rs 20 per trade irrespective of the trade volume. You can save huge money on brokerage charges if you trade high volumes regularly.

Zerodha does not charge any commission. The broker has very transparent fee information on its website, which comes with an easy-to-use calculator.

No inactivity fees or withdrawal fees are charged. The only fees are when an account is being opened as previously mentioned.

The account fee is INR 300 + 18% tax per year for Demat accounts and INR 1,000 + 18% tax per year for corporate accounts. If you open a commodity account, you will be charged INR 100 + 18% tax per year

 

Leverage

Zerodha does not appear to offer leverage on forex trading. On the website, it states that you can use three different product types, MIS, BO, and CO to avail leverage. The products and amount of leverage can change based on the broker’s RMS policy. More information can be found on the website.

The amount of leverage is expressed as a ratio, for instance, 50:1, 200:1, or 500:1. Assuming that a trader has $1 000 in a trading account and is trading ticket sizes of 200 000 USD/JPY, that leverage will equate to 200:1.

Leveraged product trading magnifies a trader’s potential profit – but of course also increases the potential loss. This facility enables traders to get a larger exposure to the market than the amount they deposited to open a trade.

 

Bonuses

Forex brokers often lure new traders with offers of deposit bonuses. This can be useful, but it is essential to discern what the conditions are to really benefit from a bonus.

The bonus usually compensates traders for choosing a certain broker, since once the account is active, the trader will have the same expenses as any other. The bonus usually only starts giving some expenses back to the trader once the person has proved himself as an active trader.

Hence, although no deposit bonuses are a great way to help you start trading, the terms to benefit from it often require trading with such a high volume before you can withdraw profits, that it may not be worthwhile.

The European Securities and Markets Authority (ESMA) has also recently placed investor protection measures on the marketing, distribution, or sale of CFDs which prevent brokers to provide the retail client with a payment, monetary or excluded non-monetary benefit about the marketing, distribution, or sale of a CFD, thus ruling out the offering of such bonuses.

There is no indication on Zerodha’s website whether the company offers any sign-up bonuses or any other promotions.

 

Trading Platforms, Software, and Their Features

The forex trading software, also called the platform, provided by a broker company to its clients to carry out their trades can be a multi-asset one that allows clients to trade forex as well as other asset classes like CFDs on stocks, stock indices, precious metals, and cryptocurrencies.

Some companies provide their own proprietary platform, while others prefer well-known platforms. If there is a choice, the trader should keep in mind what he would like to trade.

Zerodha offers the choice between two in-house trading platforms, namely Kite and Coin. Both are web-based platforms available for desktops, smartphones, and tablets.

Kits is an investment and trading platform that can be utilized to search across more than 90 000 stocks and F&O contracts. It features many indicators, studies, and tools on a powerful and customizable charting interface.

Zerodha Coin is a direct fund platform that allows traders to buy direct mutual funds online with no commission pass back, directly from asset management companies.   

 

Markets, Products, and Instruments

Zerodha offers trading in multiple asset classes that include futures, options, commodities, forex, stocks, IPOs, mutual funds, and bonds. This product offer is only of the offer on the Indian market.

Most brokers offer all or some of the following market instruments for trading:

 

Forex:

Forex trading, or currency or FX trading, involves the currency exchange market where individuals, companies and financial institutions exchange currencies for one another at floating rates.

Commodities:

As with currency exchange markets, commodity markets offer trading in contract-based tradable goods.

 

Indices:

Equity or stock indices can represent a specific set of the largest companies of a nation or they can represent a specific stock market. It is actual stock market indexes that measure the value of a specific section of a stock market.

 

Precious metals:

This involves the trading of gold, silver, and other precious metals as hard commodities that are contract-based tradable.

 

Energy:

The high volatility of energy prices due to political, environmental, and several other factors, is a typical feature of this product, making it a popular trading choice.

 

 

Safety and Regulation

Before deciding to join a broker and start trading, a potential trader needs to establish whether a broker like Zerodha is safe to trade with. One of the surest benchmarks to measure the safety of a brokerage is to establish which regulating authorities are watchdogs over its actions.

The forex market is extremely volatile, linked as it is to fluctuations in global currencies which in turn are determined by various market movements and global events.

Most forex brokers aim to provide a certain level of security through some form of authorization under relevant regulatory bodies. The most recognized of these bodies include such organizations as the FCA, CySEC, and ASIC.

Zerodha is a fast-growing discount broker which is regulated by the highly reputable Securities and Exchange Board of India.

The broker’s website does not mention much on its registration and authorization. The broker itself does not provide any independent investor protection or negative balance protection.

This means that if the balance in a client’s account goes negative, there is no protection in place to cover these losses.

Other sources state that Zerodha is a zero-debt financial services company as there is no borrowing of any kind. There is no credit risk, less than 5% of Zerodha’s own capital is lent to customers in any form.

Zerodha’s own funds in the business are greater than 25% of all client funds put together. In the years of its existence, Zerodha has been profitable as a business and has enough reserves to sustain, even if there was an extended downturn in the economy.

 

Customer Support

Potential traders need to be assured that the broker company they chose can offer the necessary support and help whenever they may need it.

Zerodha does not provide a live chat option on its website but clients can get support via telephone or email 24/5. The offices close at 14:00 on a Saturday for the rest of the weekend.

It does offer a support portal where clients that have a query can create a ticket with a query. It takes you to a site with several FAQs that might already have the answer to your question. If not, you lodge your question and the support team will get back to you.

Contact details are as follows:

 

  • Address: Zerodha, #153/154, 4th Cross, J.P Nagar 4th Phase, Bengaluru – 560078
  • Telephone numbers:
  • Account opening: 080 4719 2020 and 080 7117 5337
  • Support: 080 4718 1888

On the website, clients have the option to click on a link and select the link to their closest town and they will be provided with a contact name with telephone number and email address.

 

Research

Potential traders need to do as much as possible research about speculative trading before commencing to do it and while trading. Trading successfully relies heavily on knowledge and understanding of the markets, therefore research options offered by brokers form an integral part of its features when choosing the right company to trade with.

Zerodha also offers a range of research tools through its proprietary platform, which includes trading ideas, fundamental data, charting tools, and a news feed.

On the website, traders will also find links to a brokerage and margin calculator and an economic calendar. The broker provides blogs, pulse news, and circulars to assist traders and keep them up to date with the latest economic information.

 

Education and Training

Before starting to trade, potential Zerodha clients should arm themselves with all possible information and trading skills needed to be successful in the world of forex and commodity trading. If Zerodha’s website itself does not provide enough means, a trader should explore other information sources to obtain that skills and knowledge.

Zerodha offers several educational resources and tools to assist beginner traders. Click on the Varsity and Zerodha Educate and you will have access to 11 modules on investing, each containing between 10 and 20 chapters of study material.

On Zerodha Educate, you can watch videos that are integrated into the website, of which most can be found on Zerodha’s YouTube channel.

 

Conclusion

Zerodha is regulated, offers two account types, and trading on in-house web-based platforms. Clients have a variety of market instruments to choose from.

Fees are relatively low, it provides research and education tools, and gives excellent customer support to beginner and advanced traders.

The only drawback is that it is only accessible for residents in India.

 

Disclaimer

Zerodha and/or any of its affiliates do not provide any tips, advisory, solicitation, opinions, or portfolio management services regarding buying, selling, and trading of any securities, directly or indirectly, in any manner.

The information displayed or laid out by Zerodha is purely for either educational, informational, or discussion purposes and should not be construed as a direct or indirect recommendation to invest, trade, or speculate in the markets.

In no event shall Zerodha be liable for any investments, trades or speculative activities performed by any person based on any such information or content and all such activities shall be solely at their own risk.

While Zerodha promises to make all efforts to fill a trade at the requested price, trading online does not necessarily reduce risks associated with currency trading, therefore quotes and trades are usually subject to the terms and conditions of a Client Agreement, which is accessible through the broker’s website.

Potential traders should first acquaint themselves with all these associated risks and seek advice from an independent financial advisor.

 

Zerodha at a Glance

Broker’s name Zerodha
Headquarters Bengaluru, India
Year founded 2010
Regulating authorities Securities and Exchange Board of India
Countries not accepted for trade No countries outside of India
Demo account No
Islamic account (swap free) No
Institutional accounts No
Managed accounts No
Maximum leverage Not provided
Minimum deposit None
Deposit options UPI, Bank Wire transfers, IMPS/NEFT/RTGS transfer
Withdrawal options UPI, Bank Wire transfer, IMPS/NEFT/RTGS transfer
Platform(s) provided Kite, Coin
OS compatibility Mac, Microsoft Windows, Mobile, Web, iPhone
Tradable assets Futures, options, commodities, forex, stocks, IPOs, mutual funds, and bonds
Languages supported on website English
Customer support languages English and probably all Indian dialects
Customer service hours 8 hours from Monday to Friday, and Saturdays to 14:00

 

FAQ’s

 

Trading Environment

 

How many instruments can I trade with Zerodha?

Zerodha provides trading with a wide range of asset classes, including futures, options, commodities, forex, stocks, IPOs, mutual funds, and bonds.

 

Which platforms are supported by Zerodha?

Zerodha provides its own proprietary platforms Kite and Coin.

 

Does Zerodha offer leverage?

No

 

What spreads can I expect with Zerodha?

Zerodha’s spreads vary depending on the instrument being traded.

 

Does Zerodha charge commission?

No

 

Is Zerodha regulated?

Yes, Zerodha is regulated by the Securities and Exchange Board of India

 

Is Zerodha a recommended forex trading broker for experts and beginners?

Yes, Zerodha offers a decent trading environment for both beginner and advanced traders.

 

What is the overall rating out of 10 for Zerodha?

7/10

 

Accounts

 

What is the difference between a demo and live trading account?

A demo account is offered by broker companies and funded with virtual money that enables a prospective customer to experiment with the company’s trading platforms and its features, before setting up a real account funded with the customer’s actual money.

 

Does Zerodha offer a demo account?

No

 

Can I convert my demo account to a live trading account with Zerodha?

Not applicable as it does not offer a demo account

 

Which live trading accounts does Zerodha offer?

  • Demat & Trading account
  • Commodity account

 

What are the available deposit currencies for a live trading account?

Only INR

 

Deposits and Withdrawals

 

What is the minimum deposit for Zerodha?

Zerodha does not charge a minimum deposit

 

How do you make a deposit and withdrawal with Zerodha?

Zerodha offers the following deposit and withdrawal methods:

  • Unified Payment Interface
  • Bank wire transfers
  • IMPS/NEFT/RTGS transfer

 

Does Zerodha charge withdrawal fees?

No, but fees from a financial institution may apply

 

How long does it take to make a withdrawal?

Zerodha claims that it only takes 24 hours. Traders should note however that depending on a specific bank service it may take several days for the money to be available in a client account.

 

Author Details

Louis Schoeman

Louis Schoeman

Featured Forex and Stocks writer

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