In case you happen to do trade in the share market, it will come to your notice that the amount of commissions the stockbroker takes on each deal by way of percentage.
All investors according to the law have to pay some predetermined percentage towards his stockbroker which is known as brokerage on each deal no matter you suffer loss.
The brokerage is a serious concern for every trader as in case of profit or loss he has to pay the same. Hence one needs to be careful while choosing the brokerage.
If it is a high brokerage plan, you may not be able to earn the profit the way you may expect from the trading.
These brokerage commissions tend to cut down profits of investors by a heft margin drastically.
With the intention of handling the issue, a lot of the best brokerage houses emerged in the stock market offering a trading account having the lowest brokerage.
Definition of low brokerage account for trading
Any low brokerage account for trading can be said to be an online account for trading which realize the lower sum of brokerage, likely the lowest available in the industry.
A number of brokerage houses prevailed on the market with a brokerage that is considered the lowest in comparison to various other full – service brokerage houses.
As you go for any lower brokerage account for trading, you will not be giving any huge commission on your deals.
In a number of cases, a lower brokerage account for trading shall mean that you will be giving a lower flat fee on the deals in place of paying a percentage from the returns to the stockbroker.
Lower brokerage account for trading versus commission trading account
In case you perform trade by way of a trading account founded on a commission system, you have to shell out more money to pay the stockbroker because the commissions are usually very high.
Below are given two examples as:
Let it be like this that you acquire 1000 share of any company at the rate of Rs 500 per share via a commission based account for trading.
Assume the commission percentage will be 0.50 percent; you are required to shell out Rs 2500 as brokerage. This will lessen your margin of profit by 2500,or it can increase the losses by Rs 2500.
Presume you purchase 1000 shares of any company at the rate of Rs 500 per share by means of a lower brokerage account for trading taking from you a flat fee suppose Rs 10 per deal.
Whether you gain or lose, you will have to give away only Rs 10 in place of Rs 2500.
This distinction in the sum of brokerage that you are giving enhances in relation to the size of the transaction. The commission directly depends on the volume of your order.
But in the case of lower brokerage account for trading, you have to give away merely Rs 10 regardless of the size of the deal.