Your share broker is not just a trading firm that you choose to buy
and sell the stocks, but in order to ensure that you succeed in this
area, you choose the firm as your partner in success as well. There
are many good and reputed share brokers that you can choose from
depending upon the few factors that you compare them over. One of
these factors is the brokerage that you will be charged when you
trade in the stock market through them. Generally there are a
variety of brokerage models that are being followed by these broking
firms and then you can make a choice amongst these as per your
requirements. Read the sentences that follow to know more about
these models.
Zero Brokerage model
There are many benefits of a zero brokerage model. In some cases, it
is also known as the no brokerage model as well. In this case the
scaling charges are removed by either deciding upon a flat monthly
fee or the fee that you will pay on every order. Apart from reducing
the overall brokerage cost, this can be very helpful for those you
trade in Intraday or on very small amounts or quantity of shares.
Traditional brokerage model
In this model, every time you will trade through your low brokerage
trading account, you will be charged for that. So no matter if it is
just a small purchase of heavy intraday trading ,no brokerage, you will have to
pay on every transaction that you make. Being a customer this would
prove to be quite heavy on your pocket. But in contrast, it would
seem to be profitable for the broking firm.
Fixed pay per trade
This is one of the options which is very popular amongst the
frequent traders. Here the lot size of trade size does not matter,
as there is a fixed price for every trade that you will make. This
type of trading would levy you to one of the lowest brokerage
charges.
Prepaid brokerage model
Although this model is quite similar to the traditional brokerage
models, but in this case, the trader already pays the broker a fixed
amount in advance. Just like your mobile’s recharge comes with
validity, this amount also needs to be utilized in a certain
time frame. The advantage here is that since you have paid in
advance, the brokerage rates would automatically get reduced.
No matter which brokerage house you choose, whether you operate your
trading online or with the help of a relationship manager, one thing
that is advisable before choosing a brokerage model is to carry out
comparative analysis. Cater down your needs and model related
requirements and then finalize over something that would suit your
needs. For different traders, different plans work well and these
days some of the brokers would also give you an option of getting
things customized as per your trading needs. Since all these points
come with a few pros and cons, make a calculation and then finalize
upon a choice that takes you towards maximized profits.
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by
Mahesh Kumar
Stock marketing executive at Alice Blue.
Alice Blue was founded with the underlying philosophy to serve Indian Traders and Investors by providing world class broking service at very low cost. Alice Blue acquired a name of trust through Commodity Broking and later forayed into equity and currency segments.
Dedicated customer service, transparency to the core, pure professionalism with human touch and swiftness in work are the mantras we recite every day. Our mission is to provide world class broking service to our clients and stakeholders with optimum returns at minimal cost.
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