The Rise of Zero‑Brokerage Platforms

Imagine this: You open your trading app, place a stock order, and it says brokerage: ₹0. Sounds perfect, right? But what if that free trade is quietly costing you in ways you don’t notice?

In recent years, zero‑brokerage platforms have redefined the landscape of retail investing in India and around the world. These platforms emerged with a simple yet powerful promise: no brokerage on equity delivery trades and minimal charges elsewhere. That single shift proved disruptive enough to pull millions of first‑time investors into the stock markets.

In India, the numbers speak for themselves. Groww, which only entered the broking industry in 2020, has already overtaken older players with more than 13 million active clients by 2025. Zerodha, once the leader in discount broking, still commands a base of 7 to 8 million users, while Upstox has reported staggering growth rates of 78 percent in 2022–23, 85 percent in 2023–24, and over 90 percent in 2024–25. The appeal of free trading is not unique to India. In the United States, Robinhood became synonymous with commission‑free investing and played a pivotal role in onboarding millions of millennials and Gen Z investors. Its sleek mobile‑first interface and promise of free access to markets positioned it as a cultural phenomenon.

But the real disruption lies in the psychology of “free.” By removing brokerage charges, these platforms dramatically lowered the friction that once made investors think twice before placing a trade. While this democratized investing, it also set the stage for new challenges in investor behavior.

Why do people want 'free' things?

Behavioral economics offers critical insights into why “free” has such a strong pull on investors. When a product or service costs nothing, people often overconsume it without accounting for the hidden costs. In trading, the absence of visible brokerage charges makes every order feel costless, even though taxes, market impact, and slippage still eat into returns.

Studies on investor psychology have shown that frictionless systems encourage frequent, short‑term actions because there is no immediate pain point to slow decision‑making. In practice, this means many retail investors on zero‑brokerage apps fall into a cycle of constant trading, often mistaking activity for progress.

Real‑world examples highlight the risks. The GameStop saga of 2021, where thousands of retail investors used Robinhood to buy into a short squeeze, illustrated how platforms with zero commissions and gamified designs can fuel herd behavior. While some traders walked away with huge profits, many others suffered losses once the bubble burst.

In India, anecdotal evidence from investor forums points to a similar pattern. Users who joined apps like Zerodha or Groww for “free delivery trades” soon found themselves tempted by intraday notifications, experimenting with futures and options, and ultimately realizing that frequent trading rarely outperforms disciplined long‑term investing.

Why is Investor Discipline at Risk?

Zero brokerage platforms have made investing incredibly accessible, but accessibility comes with its own challenges. With trading apps designed to make every order seamless and “fun,” many investors start prioritizing the excitement of frequent trades over the fundamentals of building long-term wealth. In behavioral finance, this phenomenon is often linked to overconfidence and short-termism. Retail investors, particularly those new to the market, tend to believe they can time the market perfectly because each trade feels “cheap” and low-risk.

Data from Indian retail investors reflects this trend. A study by the National Stock Exchange in 2022 found that investors using discount and zero-brokerage platforms had an average trade frequency twice as high as those using traditional brokers. While the intention might be to maximize returns, the outcome often is the opposite. Higher trading frequency increases exposure to market volatility, and the compounded impact of small losses can significantly erode wealth over time.

Real-life stories illustrate the challenge. For instance, a young investor in Bangalore opened an account on a zero-brokerage platform in 2021. Enthused by “free trades,” he executed dozens of intraday trades every week, chasing trending stocks. Within six months, his account showed a net loss of 12 percent, despite the overall market being in a growth phase. The mistake was not just the trades themselves but the absence of a disciplined investment strategy and the temptation to act on every market signal.

Financial advisors caution that investor discipline is the most critical factor in wealth creation. Without a strategy, portfolio allocation, and a long-term plan, even zero-cost trading platforms can become a trap. The ease of placing orders, receiving instant notifications, and monitoring markets in real-time makes it difficult for investors to pause, reflect, and stick to a thoughtful investment plan

The Hidden Costs Behind Zero Brokerage

The appeal of zero brokerage can overshadow the hidden costs embedded in trading. While investors may see ₹0 as the fee for executing a trade, several indirect costs accumulate over time. Taxes, slippage, and opportunity costs are often underestimated. For example, short-term capital gains tax at 15 percent in India applies to intraday trades, eating into profits that may appear larger on the trading screen. Transaction costs for derivatives, mutual fund investments, or margin calls further add up, making the “free” perception misleading.

Moreover, zero-brokerage platforms often monetize their services in subtle ways. Robinhood, for example, generated revenue through “payment for order flow,” essentially getting paid to route trades to certain market makers. While this keeps the platform commission-free, critics argue it introduces a potential conflict of interest, where execution quality may not always be the top priority. In India, some platforms charge small account maintenance fees or offer paid premium features, which many investors overlook in their excitement over free trades.

The behavioral cost is equally significant. Studies show that when trades feel free, investors are more likely to chase short-term gains instead of sticking to a disciplined investment strategy. A survey by the CFA Institute in 2023 highlighted that over 60 percent of retail investors using zero-brokerage platforms admitted to trading more frequently than they would have on traditional brokers. Frequent trading often leads to lower net returns, higher stress, and a lack of focus on long-term wealth creation.

Even seasoned investors are not immune. Many report that having access to zero-cost trades increases temptation to deviate from long-term portfolios. The allure of “quick profits” is amplified by gamification features like badges, notifications, and instant updates, making it psychologically harder to resist short-term trading impulses.

Why 'no brokerage' isn't always the right answer

The phenomenon of zero-brokerage and frictionless trading is not limited to India. Around the world, regulators and investors are observing similar behavioral patterns, offering important lessons for retail participants. In the United States, Robinhood’s meteoric rise exemplifies both the opportunities and risks of commission-free trading. By 2020, Robinhood had over 13 million funded accounts, a massive increase fueled by millennial and Gen Z investors eager to enter the markets with minimal costs. The platform’s role in the GameStop and AMC short squeezes revealed how easily collective investor behavior can be influenced when trading is gamified, instant, and feels free. Many retail investors were drawn into highly speculative trades without fully understanding the risks, leading to substantial financial losses for some while generating headlines for others who made outsized gains.

European markets offer additional lessons. For instance, in the UK, the rise of zero-commission trading apps such as Freetrade and Trading 212 has been accompanied by increased scrutiny from regulators. The Financial Conduct Authority has highlighted concerns around overtrading and the potential for investors to experience “attention-driven losses,” a situation where constant notifications and frictionless execution prompt frequent, high-risk trades. These global cases show that the behavioral challenges observed in India are part of a broader trend: removing cost friction encourages more trading, but often at the expense of long-term wealth accumulation.

The key takeaway from global experiences is that low-cost access alone does not guarantee profitable investing. Whether in India, the US, or Europe, investors who lack a disciplined strategy, long-term perspective, and understanding of hidden costs are more susceptible to behavioral biases. These lessons emphasize the importance of investor education, structured guidance, and the role of research-backed portfolios in mitigating the risks inherent in frictionless trading environments.

How to maintain investing discipline?

While zero-brokerage platforms democratize access to stock markets, successful investing requires striking a balance between freedom and discipline. Investors must recognize that the absence of direct costs does not eliminate the need for thoughtful decision-making. Long-term wealth creation still relies on principles such as diversification, consistent asset allocation, and adherence to a well-structured investment strategy.

Practical strategies can help. For example, investors can treat each “free” trade as if it had a cost, a technique that psychologically restores caution and promotes deliberate decision-making. Systematic Investment Plans (SIPs) are another tool that can work effectively alongside zero-cost platforms, allowing investors to maintain regular, disciplined contributions to their portfolio regardless of market volatility. By automating investments and focusing on long-term goals, investors can harness the benefits of frictionless platforms without succumbing to impulsive trading behaviors.

Technology itself can be an ally. Many platforms now offer goal-based investing tools, watchlists, and portfolio tracking features that encourage strategic planning over reactive decision-making. Combining these features with fundamentals-first research ensures that investors do not mistake accessibility for a license to trade recklessly. In essence, the freedom provided by zero-brokerage platforms must be paired with disciplined practices to achieve the intended outcome: sustained wealth growth over time.

Why is Research and Advisory important?

Even in a world of zero-brokerage platforms, the value of credible research and advisory cannot be overstated. Access to free trading does not replace the insights provided by professional analysis or institutional-grade research. In fact, it amplifies the need for disciplined guidance because investors are exposed to more frequent decision points and a wider array of choices than ever before.

Institutional-quality research focuses on fundamentals such as financial statements, sector trends, valuation metrics, and macroeconomic factors. For retail investors, this guidance provides a roadmap to differentiate between short-term noise and sustainable opportunities. For example, while zero-brokerage apps make it easy to buy trending stocks, research may reveal that the underlying company lacks long-term growth potential or is overvalued relative to peers. Access to curated stock ideas, model portfolios, and risk assessments allows investors to align their trades with their financial goals rather than impulsively reacting to market movements.

Advisory services also help investors maintain portfolio discipline. Tools like risk profiling, asset allocation strategies, and goal-based investing frameworks serve as guardrails against behavioral biases such as overtrading, herd behavior, or chasing high volatility stocks. Anecdotally, retail investors who combine free platforms with structured advisory report higher long-term returns and reduced stress, suggesting that research acts as a critical complement to the frictionless convenience offered by zero-cost trading.

Ultimately, the combination of low-cost access and high-quality research empowers investors to enjoy the best of both worlds: the freedom to trade efficiently and the confidence that each decision is backed by fundamentals and disciplined analysis.

Conclusion: Making Free Work for You

Zero-brokerage platforms have undeniably transformed retail investing. They have lowered entry barriers, increased market participation, and brought a new generation of investors into the fold. However, the “free” aspect carries hidden costs that extend beyond money — impacting discipline, behavior, and long-term wealth outcomes.

Investors must recognize that access without strategy can be detrimental. Frequent trading, impulsive decisions, and overreliance on notifications often undermine the potential benefits of frictionless trading. By incorporating structured strategies such as goal-based investing, systematic investment plans, and fundamentals-first research, investors can harness the advantages of zero brokerage while avoiding its pitfalls.

Global lessons and real-life stories emphasize the same principle: freedom is most effective when paired with discipline. Whether in India, the United States, or Europe, investors who combine accessible platforms with thoughtful planning consistently achieve better outcomes. The hidden cost of free is not the money spent on trades but the wealth lost through undisciplined behavior. Recognizing this and taking steps to mitigate it ensures that free trading platforms become tools for wealth creation rather than traps for short-term speculation.

For retail investors today, the path forward is clear: enjoy the convenience of zero-brokerage platforms, but never trade without a plan, informed research, and a focus on long-term financial goals. This approach turns the promise of “free” into real opportunity.