You cannot afford to ignore the brokerage

Brokerages are very important costs associated with stocks and you cannot afford to ignore it. You have to be vigilant on the amount you are paying. Periodic check of your ledger account is necessary. The brokerage affects investors in different ways. For infrequent traders, a higher brokerage would lengthen the amount of time required to break even. If you are a high volume trader, a large brokerage will eat into their overall return. This is the reason why people look for best brokers with zero brokerage plans or cheapest brokerage.

There is no denying the fact that earning from stock market is an art, not just speculation, forecasting and analysis. Whether you are a retail investor or a big fund, one question you should ask yourself is "what is your trading cost"? How much part of your earning are you passing on to your broker in the form of commissions because it really affects your "profit margin".If you are already familiar with stock market, there is a small homework for you. Check out the contract note you have received from your stock broker. Or else, if you plan to enter into stock markets and seeking for a broker, exercise your mind a little to know the net brokerage being charged by your broker and study the various commission components. The reason is simple; the amount you pay to your broker may make difference in your winning or losing in the trade. It is a common mistake that novice traders execute trade assuming they are earning at least meagre profit margin, but if all the components including brokerage, taxes, and stamp duty are accounted for, the profit margin comes out to be negative. Isn’t it strange? So, understand the computation of the net trading amount you pay to your broker clearly and then proceed.

There are many brokers charging different rates of brokerage. For example, some would charge @.75% and others would charge @.5% of trading amount. However the net trading cost is computed as Trading cost = Brokerage + STT + Stamp duty + other charges. So in addition to brokerage, there are other costs accounted in net amount like STT, which is the sale transaction tax that is imposed on the sale/purchase of securities by retail/institutional investors and is charged on total turnover (cost of each share * no. of shares). For delivery of shares it is charged at.125%. For intraday selling of shares, it is charged @.025%. For buying, there is no tax for intraday trades.

I am author of this article. I write this article on behalf of Bezel group. It provides you Best Broker, Online Stock Broker and Discount Brokers.