Intraday trading is getting massive popularity in the stock market. Traders are participating in huge numbers. And why not? Intraday trading provides good opportunities for traders to make money every day.
However, everyone knows that the margins in intraday trading are low, yet it is a very profitable stock trading method if done strategically. Traders and investors are making a good amount of money using intraday trading. One thing that one should keep in mind is the charges involved in starting as an intraday trader. The most common charge that one needs to pay is brokerage fees.
Brokerage charges are subject to the number of stocks you trade. However, a trader pays a certain amount to the brokers for registration in stock exchanges. Nowadays, because of competitiveness and online trading, brokers open trading accounts for free, which reduces the cost of brokerage fees and proves to be beneficial to investors.
Free brokerage accounts can reduce the cost, yet many of them reveal their charges after you enroll yourself with them. Hence, a trader should always look for other ways as well that can assist them in reducing the brokerage charges. To find the lowest brokerage charges in India, traders will have to check the prices and consider some factors aside from brokerage charges as well, like account maintenance, NSE brokerage charges, etc.
In intraday trading, the brokerage fee is usually very high because of the number of transactions. They charge brokerage as the percentage of transactions made; hence, the higher the value of transactions, the more brokerage traders will be obliged to pay. To reduce the burden of brokerage charges from the investors who do day trading, a new concept has come into existence in which traders pay a sum to the brokers for a set of transactions ignoring the amount. This concept is known as ‘flat fee.’
What is a Flat Fee?
The flat fee is a kind of brokerage fee a self trader pays to the brokers for trading on their platforms. This amount is usually very nominal in comparison to what investors pay to brokers for every single transaction. In this, investors and traders do their research and make their own strategies to get maximum profits avoiding the hefty amount of brokerage fees for every transaction.
Different brokers charge different fees when you trade online, but usually, most brokers charge fees on every stock you trade. This can be very costly to the traders. As the number of brokers is increasing day by day in Indian stock markets, the competition is also increasing among them. In the current scenario, brokers give offers to traders and investors to reduce their burden of fees payment. Their offers provide relief to the traders. One such offer or plan given by stockbrokers is to pay when you profit. Let’s talk about it briefly.
What is Pay When You Profit?
Online trading requires making a trading account before you proceed. There, you will have to contact stockbrokers to get registered in any of the stock exchanges as per the guidelines of the Security exchange board of India, the regulatory body for stocks in India.
Stockbrokers charge fees for the services they offer. Earlier, they used to charge very hefty amounts, but now as everything is online, the charges have been reduced. They even offer some plans and offers to the traders, and ‘Pay when you profit’ is one of them.
In this offer, stockbrokers can only ask for their fee if the trader has made any substantial profits from the trade. Simply saying, traders won’t be liable to pay any amount to brokers if they don’t make any profits or incur losses. Opting for ‘Pay when you profit’ can help in reducing the loss effect if the market goes opposite to your expected trend.
In intraday trading, a trader should find all the possible ways to reduce the cost in order to maximize the returns. The ‘Pay when you profit’ plan provided by brokers can help traders a lot in reducing their costs. Brokerage charges can also prove to be money-draining for traders, yet there are multiple ways that can be utilized to avoid the possible loss. Hopefully, you are now well-informed about all the basic details of intraday trading and brokerage charges in India.
Smriti Jain is the owner and senior content publisher at Financesmarti. Financesmarti is a website where she shares a lot of useful stuff for the people and business of India. This includes small business ideas and other banking information, as well. Smriti completed her education in science & technology from Delhi University. Smriti usually has interests in digital marketing now, and she has chosen this career for the full-time opportunity. The primary purpose of starting this blog to provide quality information on the banking industry to the people.