Header Ads

Low brokerage account: You need to know this


In case you happen to do trade within the share market, you maybe aware of the commission a stockbroker takes in relation to every deal. Any investor is directed by law to part away some fixed percentage to the stockbroker which  is known as brokerage levied on each and every deal even though the investors suffer loss. There is no fixed rate of this charge,and hence in the market, the trading service providers charge as per their will and like. However, understanding the menace of the brokerage there are also some service providers who have reduced the rates and hence if you are a trader whose volume is huge, you can get a trading account opened with such a broker who charges nominal brokerage or almost no brokerage.

The brokerage realized by this way drastically cut down the profits earned by the investor. In order to solve this problem, good brokerage houses appeared in the market with the trading account having low brokerage with various options.
Meaning of low brokerage trading account

A trading account having low brokerage constitutes the online trading account that levies the lower sum by way of brokerage possibly the lowest found within the market. A number of online brokerage houses did emerge with a brokerage sum that can be said to be extremely low in comparison to various regular brokerage houses and firms.

As you go for opening trading account of low brokerage nature, you are not required to dole out hefty commissions on each and every transaction you do. For a large number of cases, this kind of low brokerage account shall mean that you will be giving some low flat fee on deals in place of giving away a percentage of profit towards the broker.

In case you trade via a trading account charging commission by way of percentage, you shall be giving much more to the stockbroker because the fee taken on a percentage basis is very high.

For example
Scenario 1

 Suppose you purchase 1000 shares from any company at the rate of 500 per share by means of commission based percentage system trading account. Let the percentage of the commissioner 0.50 % then you will be paying brokerage as a minimum Rs 2500,or it can tot up to the losses if incurred while trading.
Scenario 2
Let it be as you purchase 1000 shares of some company at the rate of 500 per share viathe trading account of low brokerage nature realizing from you flat fee Rs 10/= on every deal. Whether you gain or lose, you are required to pay only Rs 10 in place Rs 2500.
The distinction found in the sum of brokerage you shell out enhances with the volume of the deal. If you place a large order, you will be giving out higher commission respectively. In the case of the trading account of low brokerage nature, you will have to pay only Rs 10/- without any consideration of the volume of the deal.

No comments