Online trading is an Internet based trading facility that allows you to buy and sell shares through an online broker. It is a common that you talk to your broker over the phone or personally and accordingly, he buys and sells shares for you. Once you join an online trading site, you can buy and sell through the stockbroker's Web site.
Account opening costs
All broking companies charge an account opening fee; this is a one-time payment. Generally, none of them charge an annual account maintenance fee since they make their money via brokerage. This is the fee they levy every time you buy or sell shares.Sometimes, the cost of opening the account is based on the software provided. Most companies offer two types of accounts: a browser-based one and software based one.
The software-based option is much quicker; you don't have to refresh the page and wait for it to get uploaded, which is what happens in the browser-based option.
The software option offers a wealth of information by way of intra-day charts which tracks the price movement of the stocks, technical analysis which gives you an idea of where the price of the stock is headed based on its price movement till date and a host of other benefits.
Now, if you are trading shares from your office or from an internet shop, then it will be easy for you to open the browser based option and trade the shares. if you are trading from home then you can trade the shares by using the software based option.
In some cases, it may be more expensive to opt for the software package. if you are an active stock market trader and need to capture quick price movements. Then its better you choose software based option. If you are an investor who buys shares, holds on to them and sells them at a later date, you could opt for a browser-based package.
Brokerage
Some will give you a direct percentage while others levy a fixed amount per Rs 100.
When you compare the brokerage charges of different firms, always do so in percentage terms.
Also, check if the Service Tax and Securities Transaction Tax is passed on to you or if the broker picks up a part of the tax.
A Service Tax of 10.2% is levied on the brokerage while a Securities Transaction Tax of 0.1% is levied on the total trade value.
Let's say you sold shares worth Rs 20,000
Brokerage @ 0.75% on Rs 20,000 = Rs 150
Service tax @ 10.2% on Rs 150 = Rs 15.3
STT @ 0.1% on Rs 20,000 = Rs 20
Total payments made by you on Rs 20,000 = Rs 185.3
The above brokerage is for delivery based trades and decreases for intra-day trades.
A delivery based trade is when the investor buys shares with the idea of holding on to it and the shares are actually delivered to the buyer. Basically, it is a trade where the transaction ends in actual delivery of the stocks.
Intra-day trades are when you buy and sell the same stocks during the day. The transaction does not end in actual delivery but it is squared off. The net difference is paid by/ received by the customer at the end of the settlement.
To trade with a broking company, you need to have an account with one of its collaborating banks. Typically, broking firms have less collaboration with public sector banks .
Account And Brokerage
