Trading has acquired new agility due to the way one may trade from anywhere, not just at home or the office on a computer. Most of the trading houses now offer their services across multiple platforms so one may trade using their cell phone, their tablet, or their iPads from anywhere they choose to be. Is this good or what?
People seek low brokerage fees
The importance of being flexible is important but being inexpensive is more important, especially for those who are just starting out in the field of stock and share trading. To find a broker with the lowest brokerage charges in India is not difficult. You must see what products they offer and what is the limits they enforce on these products.
Traditionally, the brokers charge a certain percentage of the value of the trade. Most of the traders who indulge in huge volumes of trade end up paying plenty of money as brokerage. This sum runs into lakhs of rupees per transaction. This type of a broker is a traditional broker or a full-service broker.
Use of a discount broker
The second type of broker is the discount broker. People also call them the flat fee brokers since they will take a flat sum of money for the trade as brokerage. These discount brokers will take fixed amount, say Rs 20 per trade irrespective of the size of the trade. So, the traders pay a sum of Rs 20 for their trade between Rs 10,000 and Rs 100,000 and they are happy about it.
Let us consider an example to clarify the matter. If you buy 100 shares of Rane Eng Valve paying Rs 58,795 you need to pay only Rs 20 to the Fixed Price Broker. Suppose the traditional broker has a rate of 0.5% then you must pay him Rs 293.98. Maybe you don’t mind the amount but at the end of the year you will see a significant dent in the profits. This is one of the reasons why traders go looking for brokers with the lowest rates.
Advantages in choosing the flat-fee broker
So, the low brokerage pricing for online trading will come from the flat fee brokers. They offer several advantages such as those listed below:
- You only pay one all-inclusive fee which is only 10% of what you would pay a traditional broker.
- You do not have to worry about calculating the brokerage.
- Traders must pay less tax on the flat fee brokerage.
- The discount brokers cover all the exchanges so you can trade anywhere.
- The customer service is better since there are no complications with the brokerage calculation or size of the trade.
You have an inherent advantage when you open an account with a full-service broker. That is the size of the margin. The margin provided by the full-service broker is much higher than that of the discount broker. In addition, they have many other related services on their websites such as mutual funds, insurance, and more. You can manage all of them on the same page. It makes everything simple.