you Online trading is facilitated by stockbrokers registered with the stock exchange board of India (SEBI). They offer Demat service and online trading account to carry out smooth trades and quick trading transactions.
Traders look for cost-saving and quality trading services with a broker. This way, they can maximize their profits in the stock market as they need not pay a large portion of your portion as trading costs and maintenance fees of trading and Demat accounts. Especially intraday trading involves a huge cost as day traders require to trade frequently and in large volumes.
While trading online in the stock market, knowing about the brokerage charges and their computation is inevitable.
In stock trading, a brokerage fee is a fee of a stockbroker to execute trades and provide specialized trading services to their clients. Their services may include purchasing and selling securities, advisory services, delivery services, etc.
Delivery Trades Brokerage:
When investors hold stocks for the long term, they need to pay delivery charges. You can calculate the delivery brokerage is by multiplying the delivery charges of the broker by the number of shares you want to sell and their market price.
Intraday Trading Brokerage:
When traders buy and sell the stocks within the same trading session, they charge a day trading brokerage fee.
Brokerage fees are not uniform. It varied with every stockbroker. Generally, it depends on the type and volume of transactions a trader deals with.
Low Brokerage Trading Account
Stockbrokers offer online demat and trading accounts with online trading platforms at a lower brokerage rate to their regular clients.
There are three types of brokerage plans full-service and discount stockbrokers.
- Flat per trade brokerage: Here, stockbrokers charge the same brokerage fee at a flat rate, irrespective of the trading volume. Discount brokers generally offer this.
- Monthly unlimited trading plan: Here, discount stockbrokers charge a fixed monthly fee for trades.
- Percentage of the trading volume: The full-service broker charges a percentage of the trading volume. It increases the trading costs.
You can open a low brokerage trading account with a discount broker to save on trading costs. Unlike full-service brokers, discount brokers charge a fixed trading cost under their monthly subscription plans. With reputed stockbrokers, you can trade at the lowest brokerage rates. They ensure a great trading experience at the lowest possible trading cost. These are known for the lowest brokerage Demat account and trading account.
Let us pour light on the components of brokerage.
Components of Brokerage
- Transaction charges: It is an exchange turnover fee. The stock exchanges like NSE, BSE, etc apply this charge. It is the biggest part of the trading cost with brokers. Whenever traders make an online payment for stock trading, they need to pay a transaction fee. A portion of the total transaction amount is charged as a transaction fee.
- Securities Transaction Charges: This fee is charged on the value of traded securities on a stock exchange. For intraday trading, F&O trading, and delivery trades in equity, the broker also charges STT on buying and selling securities.
- Stamp Duty: State government levies a fee for conducting securities transactions. It is called Stamp Duty.
- Goods and Services Tax (GST): It is a union government tax of @18%. GST is calculated on the total cost of brokerage fee plus transaction charges.
- SEBI Turnover Fee: The stock market regulator, SEBI, charges this fee for its trading services.
- A stockbroker may charge an inactivity fee for a trading account. It is the charge when the broker needs to maintain your brokerage account while you are not available. It may increase the brokerage fees for traders who do not trade frequently.
- If you trade in large volumes of stock, you can ask for personalized trading offers from your broker.
Thus, like other traders, if the brokerage is a concern for you also, consider a discount broker for a low-cost trading account.