In the article we should talking about how did a high brokerage spoil your profits and deeper your losses. In India there is a lot of brokerage firms that provides you brokerage services. If you are new in Stock Market there is more chances to fall in the trap of that brokerage firm that charges you high brokerage that more than there running cost. This is the biggest mistake you made when you are new in Stock Market. Even I made this when I start my career in this field. But after that I realise my mistake and switched to another broker. Some of the most popular brokerage firms in India charges you very high brokerage. For example ICICI Direct is most famous brokerage firm in India and they charges you very high brokerage to there clients as compare to all other brokers in India. They also charges you 700-800 Rupee’s as the name of annual maintenance charges of your trading and demat account. Which is also very high as compare to other brokers out there’s.
How did they attract the more clients : The one of the most delicious thing they do to attract the more clients. They asked you they have zero account opening charges for new customers. And then new customer got happy because you don’t have to pay opening charges and than you think you saved account opening charges. So let’s open a account with then. If you think that you already fall in trap. Because they open your account at free of cost but they charges you high brokerage. Which you need to pay every time when you execute a new trade. With this they complete there account opening charges and as well as change you more forever.
Another thing they said when you asked them for there brokerage charges. Most of time they reply you that. There brokerage charges is JUST 0.05% Intraday and 0.5% for Delivery for each side. What that mean of each side?. That mean is every time when you buying and selling the shares they charges you 0.05% for buying and as well as 0.05% for selling and 0.5% for Delivery. So now there total charges is (0.05%+0.05%=0.1%) for per trade for Intraday and (0.5%+0.5%=1%) for Delivery based trade or overnight trade. If you are beginner then you think that is also very low because I have Only 1 lac capital and if they charge 0.1% for Intraday and 1% for Delivery then that is very low because if I take Intraday trade with your full 1 lac capital then you end up paying 100 Rupee’s for brokerage and plus exchange charges which is same for every trader and which is roughly around 0.03%. Which is 30 Rupee’s. So now your total charges is (100 for brokerage and 30 for exchange) over 1 lac capital. So now your total charges for Intraday is 130 Rupee’s. And roughly around 1050 for Delivery based trade. So with this way they spoil your profits.
Every trade is not profitable in Stock Market. You also made losses in Stock Market. But your brokerage rate is even remain same when you making a losses in Stock Market. So now suppose you make 2000 loss over your 1 lac capital. But that is not your total loss. Your total loss is even more because you have to pay your brokerage. So in that case your total loss is 2130 for Intraday and 3050 for Delivery. So now you have to pay more as the name of brokerage. So in that way high brokerage deeper your losses.
So now you think what is the solution of that : The solution is very simple open a account with a discount broker or switched your account to a discount broker. In simple words discount broker is working same as a retail brokers. The only difference is that they Didn’t have a offices in every city. With this they low there running cost. So if there’s running cost is low then they charge to you very less and fixed brokerage. So in India most of discount broker’s charges of 0.01% for Intraday and 0.1% for Delivery and flat 20 Rupee’s whichever is lower. So flat 20 Rupee’s is mean is you have to pay more than 20 Rupee’s even if you buying a shares of 1 crore Rupee’s.
So Zerodha is the best Discount broker in India. There brokerage charges is given below.
- 0.01% for Intraday.
- Flat 20 Rupee’s for future and options for as many lot (1 to Infinity). You only have to pay 20 Rupee’s even if you buying 1000’s of lots.
- Zero brokerage for Delivery based trades. So you not need to pay any brokerage if you take delivery of that Stocks.
- Zero commission on mutual funds.
- Zerodha Pi In house made trading platform.
- Zerodha Kite web based trading platform.
- 200 Rupee’s trading account opening charges. 100 for Demat account opening charges.
Trading account opening charges is only for 1 time.
- More than 1 lac happy clients.
You Can also read my full review regarding Zerodha. if you want to know more about it.
So with this you never spoil your profits and deeper your losses cause of high brokerage.