Trading in stock markets online has now come up of age; thanks to the technological development that occurred in the last few years. One can now find a number of stockbrokers and broking houses that provide an amazing platform for the traders who can start trading with minimum investments. The concept of low investment and day trading is indeed considered as a boon for many small term investors who actively participate in trading every day.
With a very small investment, traders can now make good benefits by trading online, but they also need to choose the right broker for the same. Hence, it is also important to choose a demat account that has the lowest brokerage charges.
Till the last few years, the share brokers in India used to charge a said percentage from the value of the trade as the brokerage charges. Traders who invest huge have to thus pay a huge sum as the brokerage charge. Such brokers are known as the full service or the traditional brokers. Large investors at times end up paying lakhs of rupees as brokerage but such brokers are not ideal for small and beginner traders.
One can now find the new breed of brokers in our country who are also known as the flat fee or the discount brokers. These brokers charge a fixed fee for each trade irrespective of the number of shares traded. The trader thus pays only a fixed minimum sum for every trade he does. This comes in quite handy to those investors or traders who are into day trading as they trade multiple times in one day.
For example, when you trade 100 shares of a stock at Rs. 1000 for each share, then the brokerage charged by the flat fee brokers remains only at Rs. 20 whereas the traditional brokers would charge about Rs. 500. This example proves that traders can save a lot when they choose brokers who can provide them with the lowest brokerage charge demat account.
There are quite a number of advantages when you choose a broker who provides lowest brokerage charges, they are:
Traders can save more than 90% on the brokerage on all their trades. As there are no additional fees and as the account has a low brokerage, one can trade more, and such accounts are more affordable to the small and average traders.
Calculation of the brokerage also gets simple when you opt for a flat fee or an account with a low brokerage. Traders can calculate the brokerage by simply calculating the number of trades with the fixed brokerage.
Brokerage firms that offer low brokerage charges are more focused and they also provide great customer support.
As most of the brokerage firms deal with all major exchanges, traders find it easy to trade on all exchanges with ease.
The taxes that are generally charged on the brokerage charges are less as the brokerage amount itself is less.
Unlike small brokerage houses, a number of flat fee brokers also provide amazing investment advice and are there to help their customers when they need them.
Traders who often trade in huge amount can also choose the low brokerage demat accounts where the brokerage is charged per crore traded. Not every broking firm charges the same and these charges can also differ based on the segment and the exchange where the trader is trading.
There are also other tips that one needs to keep in mind before choosing a broker. Let us have a look at some of them:
If you are more into day trading, you can then choose a broker who offers lower fees or a flat fee per transaction.
Remember to open your demat account with a reputed and experienced broker.
Traders also need to know the different kinds of fees or the cost that is associated with working with the broker you have chosen. There can be fees like the account opening fee, maintenance and transactions fee and so on.
Once as a trader you have studied about the fees and the brokerage charges, you also need to know the platform provided for trading. By choosing a broker who can also provide you with market research tools acts as a bonus as it would help take informed and well-researched decisions.
As a conclusion, it can be said that before you choose a broker, do remember that you have to work together as a team as it helps you to make informed decisions about your hard earned finances.