As you discuss matters of low brokerage charge, you straight away think about discount brokers. You all of a sudden begin thinking about brokers that provide lowest brokerage charge in the country and also the minimum brokerage fees. Before you start to compare brokers on fees, it is necessary to know what in real broking cost covers.
As you talk about brokerage, it is a big term and encompasses the below-given details.
You have to think about actual brokerage charges, know account opening charges, charges for annual maintenance, charges deemed for fund transfer, charges that are charged for research and other service charges, and many other hidden charges.
As you comprehend lowest brokerage charges or you discuss of least brokerage charges, you are required to take an inclusive view. Let us take some handy examples into view which will serve for investors the same as a brokerage calculator also. In India, lowest brokerage charges are usually limited to online trading only.
Useful instances of what low brokerage encompasses:
Type A: This kind of broker charges an account opening charge of Rs 200/= and demands an annual maintenance charge of Rs 300/=. Nevertheless, you come to know brokerage charges are as minimum as 0.01% or Rs 20/= whichever is deemed lower.
Type B: This broker demands brokerage charges that are similar to type A which is account opening charge, but annual maintenance is very low.
Type C: In this type of brokerage charges, you find an account opening charge and annual maintenance, but as taken the cost per lot is very low at Rs 9/ lot. When all of these costs are taken in view, they conclude that the break-even of your Nifty trade as you are going to trade in futures.
Type D: This kind of broker does not take from your account opening charges or any annual maintenance. On all types of NSE segment, there is no brokerage. Now, the question arises which is very basic how they earn money. In this category, the brokers make considerable money on the float. In contrast to full-service brokers, the discount brokers will not make any kind of move without pre-funding. In view of the fact that the clients for discount brokerage are spread crosswise many medium and small sized customers, the brokers always have an available float with them that can constantly make above-average returns by the products as liquid funds.
You must know that there are hidden costs too that discount brokers enforce on you. For instance, take the case of trade facility and back up calls which involve a cost whenever there is no internet service. In the second place, if the broker requests for some document, he adds up the charge for it, no doubt small. Thirdly, if there are fund transfers, it entails a cost. In case of RTGS and NEFT do not incur any cost transfer using payment gateways entails a cost of per transfer Rs 10-15. If the intraday position by the trader does not close by 3 pm, some brokers charge you in addition.