Sign Up for Zero Brokerage Demat account & join free our Private Telegram Channel. You follow a YouTuber or a blogger and in their videos/blog they talk about opening a Demat account using their referral link and it seems innocent enough. You get a Demat account and some special privileges also. Does the YouTuber/Blogger get any benefits? What are the benefits one can get by referring opening of demat account?
Where there is a sea, there are pirates.
If something is free, you are the product
Offer on Opening a Demat Account
Often we see such messages on YouTube and Blog. All the people opening accounts with Zerodha/Upstox/AngelBroking/5 paisa/Alice Blue.. through us will be our privileged members and would avail following membership benefits :
- Exclusive Quality Research
- Exclusive Videos on Stock Market
- Exclusive Portfolio Management Guidance
Many click the link and become a member thinking of the benefits they will enjoy.
But what does the YouTuber gain on having you open a Demat account through their link?
Along with your family and friends enjoying seamless trading, you can also earn rewards for every referral
- Referral Bonus: Earn incentives through referrals, the more they refer the more they earn. Upstox gives Rs 500 per referral.
- Brokerage sharing: Get a share of the brokerage from each trade their referred client makes. The YouTuber or blogger becomes an Authorized Partner (AP) and works like a sub-broker as they refer the clients. They earn commission on the brokerage to their mapped clients paid. For example, Zerodha pays flat 40% brokerage to Zerodha Authorized Partners.
From the broker Upstox website
Technically, one should disclose the fact that they are an affiliate/sub-broker
Secondly, many such YouTubers encourage one to Trade and many times even in Future and Options. This is what you should be careful of and should only do if you understand.
if you buy an option, your downside potential is the premium that you spent on the option. If you sell a call there is unlimited downside potential; if you sell a put, the downside potential is limited to the value of the stock.