Share trading is a popular way of investing in the stock market and earning profits from the fluctuations in the prices of different securities. However, share trading also involves paying brokerage fees to the stockbroker who facilitates your transactions on the exchange. Brokerage fees can vary depending on the type of broker and various other parameters. This fee can eat into your profits and reduce your returns from share trading.
Here, we will share some ways to do trading in India at low brokerage and what factors to consider while choosing a broker.
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A discount broker refers to a stockbroker who offers online trading platforms and levies a flat charge per trade, irrespective of the trade value or size. A discount broker provides no advisory or research services and only executes your orders on the exchange.
On the other hand, a full-service broker is a type of stockbroker who offers a wide range of services, such as advisory, research, portfolio management, margin funding, etc. They charge a percentage of the trade value as a brokerage fee. A full-service broker may also charge other fees, such as account opening fees, transaction charges, and annual maintenance fees.
If you are looking for low brokerage charges, a discount broker is better than a full-service broker. However, before deciding on an ideal broker, you should also consider the quality of their trading platforms, customer service, reliability, security, etc. You should also check if they offer value-added services that suit your needs, such as margin trading, direct mutual funds, or IPOs.
Not all discount brokers charge the same flat fee per trade. Some may charge Rs 10 per order, some charge Rs 20 per order, and some even offer zero brokerage plans for specific segments or products. Therefore, it is essential to compare the brokerage plans and charges of different brokers before choosing one.
Review the other charges that may apply to your trading account, such as account opening fee, annual maintenance fee, transaction charges (such as exchange turnover fee, clearing fee, stamp duty, GST), demat charges (such as demat account opening fee, annual maintenance fee), etc. These charges may differ with brokers and affect your overall trading cost.
You may negotiate with your broker for lower brokerage rates if you are an active trader with a large trading volume or value. Some brokers may offer discounts or incentives to loyal or high-volume customers and reduce their brokerage fees accordingly.
However, never compromise on the quality of service or platform for lower brokerage rates. Also, check any hidden terms or conditions attached to the lower rates.
Some brokers may offer prepaid or fixed monthly plans that allow you to pay a lump sum amount upfront or every month and enjoy unlimited trading at zero or low brokerage rates. These plans may suit you if you trade frequently or in large volumes.
However, before opting for the customized plan, consider the following factors:
Also, check if the plan offers flexibility or benefits, such as rollover, carry forward, bonus, etc.
Before placing any trade, use online tools or calculators to estimate your brokerage and other charges that may apply to your trade. This will help you to know the exact cost of your trade and the expected net profit you will make from it. You can also compare the cost of trading with different brokers and choose the one that offers the lowest brokerage and other charges.
You may use online tools or websites that provide brokerage calculators, profit and loss calculators, and margin calculators to estimate your trading costs and returns.
Share trading in India can be rewarding and profitable if you choose the right broker who offers low brokerage charges and high-quality services. You may follow the suggestions mentioned and enjoy trading at low brokerage and save money on your trading costs. However, remember that brokerage is not the only factor determining your share trading success. You must have a sound trading strategy, risk management, discipline, and patience to achieve your trading goals.