For those who trade in the stock market, the brokerage is a regular term that they deal with. It is a charge they have a bear to carry out the trading irrespective of nature whether it is an intraday trade or delivery based. For a broker, it is income, and hence he loves to have more rates of brokerage. However, the traders do not accept the broker with high rates, and hence a broker has to take charge as per the industrial practice only. Some brokers charge a fixed amount as brokerage while some charge as a percentage of the turnover. Some brokers also charge a lump sum amount as advanced brokerage and allow the trader to carry out the trades without any brokerage thereafter.
Those who deal in the market and have regular trading with high volume also search for a broker who can offer a plan with zero brokerage. However, for any broker or broking company usually, it is not possible to offer such a plan as their major source of revenue is brokerage only. In such a case, the traders have to pay these charges to one or other broking company or broker. There are many expenses a broker or company that offer trading platform has to bear. They also need to pay the fee to the regulatory authorities and earn a profit. In such case plan with zero brokerage is technically not possible for them.
Why does a trader love to have low brokerage plan?
Well, for a trader it is an expense. The simple rule here is lower the expenses higher the profits. The saved expenses can help one have addition to margin money which can be used to have some more trading and fetch a little more profit. This strategy, over a period, can lead to a huge volume. Hence every trader loves to save this charge with the help of low brokerage.
If the trader makes some profit, it is reduced to the extent of the brokerage and if he makes any loss the same is increased due to the addition of brokerage.
How to save on brokerage?
Well, usually the brokerage rate in the case of delivery based trading is high than that of the intraday trading. For a trader, intraday trading is also an opportunity to make some quick money. Hence, usually if one wants to save the brokerage charge and earn money faster than the intraday trading can be much helpful. In intraday trading which is also known as day trading, one needs to buy and sell the shares on the same day, and he cannot carry forward the trade. It is a part of the cash segment of the market. If one carries the trade forward, it converts into delivery based trading where the brokerage rate is usually much higher than that of the day trading. Those who are regular traders know this fact well and hence prefer to have intraday trading only. However, one must note that without proper knowledge this trading can be risky also.