Those who are interested in the stock market must know the ways how to make money from this market. There are two options here. One can go for investment in some of the shares and hold them for a long period. The trading is another option where the trader can buy and sell the shares of some company in the same trading session. For the trader, the trading account is mandatory and same is with the Demat account also. As per the SEBI, a regulator of the stock market, there are two institutions where one can open a Demat account.
The trading account:
For every trader, the trading account is a must. To carry out the trade, there are two options for a trader. He can ask the terminal operator to carry out some trade and set different limits such as profit booking or stop loss. Once the order is executed as per the market, the operator will update the client by calling. For this service, there is a charge taken by the broker which is known as brokerage. It is an expense for the trader, and hence he needs to search for the best discount brokers with whom he can have the account for trading. Different brokers offer the discount in certain conditions only as it is a reduction in the revenue of the broker. Hence usually the brokers do not compromise with the brokerage rates and as there is no standard rate in the market one can go for it as per the agreement between the client and the broker.
The situations:
Here are some situations when the broking company has to compromise with the rate of brokerage.
- New business: Over a period the broking firms keep on expanding. Hence if a firm has opened a new business in some area, he needs to have a client base. To attract the people who deal in the market and get their accounts opened, the firm offers a low rate of brokerage so that all the traders who are interested in saving the amount of brokerage on their trades can go for the new account opened. Hence the new business can have a client base, and it can be converted in a profit-making centre in a limited period also.
- Advanced brokerage: In the case of an advance brokerage the fir gets its revenue in advance. Hence it can offer unlimited trades to the client for a specific period, without having any additional broking For the clients who have a huge turnover can go for such scheme as they can save a good amount on brokerage charges.
- Online account: In the online account, the client needs to carry out trading on his own with the help of resources such as an internet connection and a computer or smartphone. Here the broking company does not have to support much and hence even at a low rate they like to have the client as such clients can also add a little amount to the profitability of the company.
