In case you happen to do trade within the share market. Certainly, you will come to know the amount and percentage of fees and commissions the stockbroker levies from you on every deal. An investor is directed by law to part away some prearranged percentage to the stockbroker is referred to as brokerage on all deals although it ends up in a loss. Hence to avoid such damage, traders prefer to have an account with one who charges no amount of brokerage or low amount. Many of the brokers offer services at a much low rate of brokerage and to save amount on it; there are traders who always search such service providers.
All these brokerage charges drastically ended in minimizing the returns of any investor by the hefty margin. In order to address this issue, the best brokerage houses and firms emerged in the financial world bringing with them a trading account havinga very low brokerage.
Meaning of a low brokerage account
A trading account of low brokerage nature can be said to be an online account for trading that takes the lower sum of brokerage, possibly the lowest within the market. A number of online brokerage houses do emerge with a brokerage account that is extremely low in comparison to various full- service houses.
As soon as you open some low brokerage account for trading, you are not needed to shell out hefty commissions on the deals. Almost, in all the cases, this low brokerage account for trading will necessarily mean that you are being levied some low flat fee in relation to the deals in place of giving away a percentage of the returns gained on the stocks towards stockbroker.
Low brokerage account for trading versus commission account
In case you trade by way of any trading account regulated by commission system, you have to give extra to the stockbroker because the percentage of commission tends to be very high.
Below are given an example
Let it be like this that you purchase 1000 shares of any company at the rate of 500 per share by way of commission regulated trading account. In case the percentage of commission is 0.50 %, you will have to dole out as a minimum Rs 2500 brokerage. It will surely cut down the returns by 2500 or shall tot up the losses by 2500.
Suppose you purchase 1000 shares of any company at the rate of Rs 500 per share via a low brokerage account of trading taking some flat fee say Rs 10 per deal. Whatever be the case profit or loss, you are required to give only Rs 2500.
In the case of commission brokerage, the sum of brokerage gets enhanced in relation to the volume of the deal. The bigger the deal, the more will be the commission. But in the case of any low brokerage account for trading, you are needed to give only Rs 10, regardless of the volume of the deal.