February 12, 2016

Different Brokerage models in Share Brokerage- Informative Post

Your share broker is not just a trading firm that you choose to buy

and sell the stocks, but in order to ensure that you succeed in this

area, you choose the firm as your partner in success as well. There

are many good and reputed share brokers that you can choose from

depending upon the few factors that you compare them over. One of

these factors is the brokerage that you will be charged when you

trade in the stock market through them. Generally there are a

variety of brokerage models that are being followed by these broking

firms and then you can make a choice amongst these as per your

requirements. Read the sentences that follow to know more about

these models.

 Zero Brokerage model

There are many benefits of a zero brokerage model. In some cases, it

is also known as the no brokerage model as well. In this case the

scaling charges are removed by either deciding upon a flat monthly

fee or the fee that you will pay on every order. Apart from reducing

the overall brokerage cost, this can be very helpful for those you

trade in Intraday or on very small amounts or quantity of shares.

 Traditional brokerage model

In this model, every time you will trade through your low brokerage

trading account, you will be charged for that. So no matter if it is

just a small purchase of heavy intraday  trading ,no brokerage, you will have to

pay on every transaction that you make. Being a customer this would

prove to be quite heavy on your pocket. But in contrast, it would

seem to be profitable for the broking firm.

 Fixed pay per trade

This is one of the options which is very popular amongst the

frequent traders. Here the lot size of trade size does not matter,

as there is a fixed price for every trade that you will make. This

type of trading would levy you to one of the lowest brokerage


 Prepaid brokerage model

Although this model is quite similar to the traditional brokerage

models, but in this case, the trader already pays the broker a fixed

amount in advance. Just like your mobile’s recharge comes with

validity, this amount also needs to be utilized in a certain

time frame. The advantage here is that since you have paid in

advance, the brokerage rates would automatically get reduced.

No matter which brokerage house you choose, whether you operate your

trading online or with the help of a relationship manager, one thing

that is advisable before choosing a brokerage model is to carry out

comparative analysis. Cater down your needs and model related

requirements and then finalize over something that would suit your

needs. For different traders, different plans work well and these

days some of the brokers would also give you an option of getting

things customized as per your trading needs. Since all these points

come with a few pros and cons, make a calculation and then finalize

upon a choice that takes you towards maximized profits.


 Mahesh Kumar

 Stock marketing executive at Alice Blue.

Alice Blue was founded with the underlying philosophy to serve Indian Traders and Investors by providing world class broking service at very low cost. Alice Blue acquired a name of trust through Commodity Broking and later forayed into equity and currency segments.

Dedicated customer service, transparency to the core, pure professionalism with human touch and swiftness in work are the mantras we recite every day. Our mission is to provide world class broking service to our clients and stakeholders with optimum returns at minimal cost.

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