For every trader in the market it is a dream to make maximum
money with minimum trades. However, in many cases the traders love to go for
more trades also if the market supports and his decisions go right to make more
profit. The traders usually prefer to have intraday trading with the help of
which the profit can be maximized with low investment as well as risk. Usually
the share traders do not take much risk and hence prefer to leave the trading
with a narrow margin also. In such situation what they need is service of
trading with low brokerage rate.
The low brokerage:
For the brokers the main source of their earning is brokerage
only while for the traders it is an element that reduces their profit. Those who
love to go for volume based trading need to have the lowest
brokerage because
for them the profit may be low and at the same time if they have to pay high
brokerage there may be no reason left for the trading at all. Hence both of
them try to have the benefit while trading. For the traders who want the
trading services at low brokerage it is imperative to find the best service
provider in trading who are also known as discount brokers.
The type of brokerage:
Those who want to have low brokerage services may have to
counter different types of brokerages also. In some of the cases the brokers
ask for the advanced brokerage as they can have secured trading. They offer
overall low rate of brokerage if one provides advanced brokerage for specific
term. This brokerage is for a fixed duration. Another type of brokerage is a
fixed percentage of turnover value which can be reduced proportionately to the
increased turnover. There are fixed rate of brokers who offer services for a
specific rate which is much lower than the rate of full service brokers.
In the online trading also many broker offers rate which are
unbelievably low compared to the offline trading.
Why brokers offer discount in brokerage?
The brokers offer discount in brokerage for several reasons.
In case they want to attract more clients in a specific area they reduce the
rate of brokerage so that the competitor cannot beat them. In the areas where
they want to penetrate they need to have client base and to generate such
client base they prefer to offer discount in the brokerage. There are also some
brokers who open new branches in various areas and to have larger client base
which can offer them more revenue regularly they prefer to compromise with the
rate of brokerage. However, as a client one must be sure about his rate of
brokerage as well as the type so that there is no misunderstanding about the
same and he can calculate the net profit authentically. Usually it is seen that
the full service brokers are not much willing to go for the discount in
brokerage.
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