Having an online brokerage account is quite easy now-a-days. There are various companies in competition to provide better services than the other and the customer enjoys a multitude of services at very attractive rates. One of the primary reasons of setting up an online brokerage account is convenience. A lot of time, energy and certain amount of cost are saved when a person carried our intraday or delivery trading online. What would have otherwise been a service for which a person heavily relies on a stock or commodity trader is now become a popular trend amongst people, who are internet and share market savvy.
There are, however, certain costs involved in setting up, maintaining, transacting in and eventually closing an online brokerage account. It is important you choose the right type of account based on the following parameters:
1. The fees charged by the company offering the account.
2. The reliability of the company in terms of security and information.
3. Ease of using the trading platform online – will you be able to manage the various icons, notifications and commands to make the right transactions?
4. How often you trade in commodities and/or stocks?
5. How well the website is maintained – it frequently downs or there are very rare instances in which the website was unavailable?
6. Finally, how securely are the website and the online brokerage accounts maintained?
When you have chosen a reliable brokerage account provider, use a brokerage calculator online to estimate approximately how much you will be paying as charges to use the account. Remember, the profits that you make from your transactions are the gross earnings. Only after you have deducted these charges can you arrive at your net and actual profit. It is also an important tool to be used in comparing brokerage companies.
Fees for delivery trading are generally and very slightly more than intraday trades. Some of the components that will be used to calculate the figure are:
1. Service tax on brokerage – this stands at approximately 10.36%. After applying a discount for education cess, it comes down to 10.30%.
2. Security Transaction Tax – this is about 0.025% of the selling amount only.
3. Stamp duty payable to the government – This stands at 0.002% for the total turnover you have in one business day.
4. Regulatory charges of 0/004% on the total turnover of the day.
5. The actual commission or brokerage charged by the company – this is usually between 0.03 – 0.05% on the buying and selling.
While the first 4 points are fixed, the last point can be a variable factor. Most companies, in order to maintain good business relations with their key players and to encourage people to trade more on a long and short-term basis, offer a discount on the brokerage if the volume of trade of a person or company is high.
You need not calculate each of the figures on your own. Thanks to the online calculator, you only have to enter the buying/selling value or the transactions you have made. It will calculate the turnover and/or the brokerage payable instantly.