Recently we came across a post in one of the popular trading forum of India, Traderji. Ok, coming back to the Post, this gentleman purchased 24, shares of FCS software Ltd at Rs1. Call it ignorance or misselling or laziness to understand the brokerage structure of the broker before signing the dotted lines, choice is yours.

Look at the brokerage charges of Sharekhan specified Source link. As you can see, he expected brokerage of 0. Minimum Brokerage Charges per Transaction: As there is minimum per share charges, few brokers charge minimum brokerage per transaction. Look at the screen shot of the ICICIDirect brokerage charges.

What it means is, Investor will be charged minimum of Rs35 or 2.

Now if you go by 0. You may be wondering how this 2.

Thankfully in India the regulatory rules does not permit any broker to charge more than 2. To summarize, minimum brokerage policies affect the traders in following ways. If you happen to fall in one of the above categories, that is, either you trade in penny stocks or invest in small amounts, then any broker with minimum brokerage policy will be big NO for you. Some of the well known discount stock brokers of India are Zerodha and RKSV who have good track record since They charge a flat fee of Rs 20per order or 0.

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Lets calculate the charges of Zerodha for the FCS case that we discussed. These brokers provide brokerage calculators on their website using which one can foresee all the charges before initiating the trade itself.

For example, You can check Zerodha Brokerage Calculator and RKSV Brokerage Calculator. As you can see, the total loss could have limited to just Rs It should be very clear that, just because of minimum brokerage policies, full service brokers such as ICICIDirect, sharekhan and Angel Broking does not make bad brokers. They are leading stock brokers of India with top notch customer service. But as far as the above two scenarios are concerned, discount brokers are best suited and offer lowest brokerage charges in India.

Discount Brokers provide bare minimum infrastructure to enable the trader to execute his trades on the stock exchanges.

And this is the only catch!.

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Because of this limited overheads, they can afford to have no minimum brokerage policies. If you can trade on your own and if you trade frequently then opting for trading account with Discount Brokers can save lot in terms of brokerage charges and taxes.

The purpose of this article is to educate our newbie trader friends about how selecting a stock broker who does not match their trading profile can cost them. Hope the article was useful for you.

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