Zoho co-founder and CEO Sridhar Vembu said on Wednesday that he has deep respect for the CEO of Zerodha -- the largest online stock broking firm in the country -- for asking some of his most active customers to not overtrade.
"This is integrity. This is Dharma. Nithin (Kamath) is telling his most active customers 'Don't do too much trading, excessive trading will lose you money'. Deep respect Nithin," Vembu tweeted.
Read more: We see slowdown in growth, average order size has come down: Zoho’s Sridhar Vembu
On Tuesday, Zerodha co-founder and CEO Nithin Kamath on Tuesday said that the biggest reason active traders lose money is overtrading. He also asked traders to control their impulse to trade.
In a Twitter thread, Kamath wrote, "The biggest reason active traders lose money is overtrading, the low brokerage doesn't help. Traders forget that costs like STT (securities transaction tax), stamp duty, etc. are charged as a percent of every trade and compound quickly."
He added that traders will now see the total cost of a trade on the order form. "Ideally, we should have introduced this feature even before the SEBI circular requiring all trading platforms to display costs on the order form. This was a miss from our side," Kamath wrote.
He added that the biggest cost to traders -- the impact cost or the money lost due to the bid-ask spread -- cannot be captured.
"For example, if the bid is at Rs 100 and offer is at Rs 100.2, buying at Rs 100.2 and selling at Rs 100 means a loss of 0.2 percent of the trade value. Impact costs aren't obvious, but add up when you overtrade," Kamath explained.
Read more: Bootstrapped Zerodha, Zoho become the most profitable new-age companies in FY22
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