While trading in the stock market, it becomes imperative for you to know about the various fees and charges, including brokerage charges, and how these charges are respectively calculated. Once you open a Demat Account and a Trading Account, you are all set to trade in stock markets. But, you must remember that you cannot trade directly in stock markets, and must trade in shares and securities only through a broker. With the advent of the internet, you can use the online broking platform provided by various stockbrokers.
A broker is a financial intermediary, middleman or agent through which you can trade in stock markets. You require the services of a broker to trade in different financial instruments, like stocks, futures and derivatives. There are two types of brokers in stock markets:
The fee that brokers charge for providing their services is known as brokerage charges. This is not uniform and often varies from one broker to another. It also depends on the type of transactions you make. Often, the brokerage slabs provided by stockbrokers are dynamic, and regular clients get benefits of lower brokerage rates.
The brokerage plans depend on the type of broker.
Discount brokers offer two types of plans:
The brokerage is calculated on the agreed percentage of on the total cost of shares either purchased or sold. Here, you are charged for intraday trading, and for delivery. Let’s understand both concepts:
Intraday trading: When a trader buys and sells shares within the same trading day, they are employing the intraday trading strategy.
Delivery: These are the charges when you decide to hold your stocks.
Along with brokerage charges, you have to pay a slew of other charges—depending on the type of financial instrument—which then constitutes your total trading cost. These are:
Thus, brokerage charges are calculated by stockbrokers as a percentage of the trading volume.
If you want to trade in stock markets, remember to select a trusted financial partner, which can provide you with features like free online Demat Account and trading account. You should always look for benefits, like brokerage cashback and discounts on the Annual Maintenance Charges (AMC) of your online Demat Account. You must always select a financial partner, which offers different equity brokerage plans, like Variable Brokerage Plan (VBP) and Value Added Subscription Plan (VAS).