Is your Broker Looting you? Want to Open a trading account and confused about brokers?

  

  In this guide, I will explain to you about brokerage 🤑💰, type of brokers, and a bit about tax you pay in trading as well as in investments.

    Brokers are the middleman which connects transaction between customers and Exchanges (NSE, BSE). These brokers charge some amount depending upon the number of orders (transactions) or can charge upon the number of stocks you trade while some are leverage brokers (Things are getting a little complicated huh!! 😓😓😓.......Let’s make it simple😄 )

     Following is the chart of Reliance📈, its making higher highs and we want to buy this stock. (This stock is just, for example, don’t buy it blindly🙈🙈).

    

Fig 01: Reliance Chart Pattern

So let’s say I have two accounts 1) Full-service brokerage and 2) Discount brokerage

The full-service brokerage provides you advisers who manages investments decision and give advice and support. Their brokerage is higher as they offer recommendations. They are established players who provide services which include:

a.       Trading (Execution)

b.      Call N Trade

c.       Research & Advice

d.      Relationship Management

e.       They have offline services because they have multiple physical branches

 

    Talking about Discount-Brokers, I think they are the best as they don’t provide you a recommendation but what they offer you is low brokerage and mostly Zero delivery charges (In positional/delivery trade buy and sell transaction is not completed within a day, simply saying they are not intraday).

Hey, we were buying Reliance right, let's buy it!!

If we buy Reliance on 1600 and sell it at 1700 at 500 quantities in 

ICICI Direct (full-service broker) then the charges will be

ICICI Direct Brokerage (full-service broker)

 And for Zerodha (discount-broker) it will be

 

Zerodha (discount broker)

Brokerage:- Depends upon the broker to broker, discount brokers charge Zero Brokerage.

STT:- STT is the tax levied by the Government when transacting on the securities market through any of the stock exchanges. It is levied on both “Buy” and “Sell” side when trading results in delivery and only on sell-side when trading does not result in Delivery (like intraday or in F&O). Trading in the currency segment is exempt from STT.

CTT is levied by the Government when transacting in the commodities only on the sell-side.

SEBI Turnover Fees:- SEBI governs Indian stock market, so this tax is paid to SEBI

Stamp Duty:- This tax depends upon the state to state.

Total Brokerage and Tax:- Addition of all taxes and brokerage

Total Profit or Loss:- Money that comes in or out of your pocket after paying taxes. 

    Hush lots of taxes in Full-service brokerage but there are other advantages they offer to you like taking margin for your positional trades. (In Layman terms margin means if a stock is at 1Rs and have 10X margin you can buy 10 stocks in 1 Rs only).

Conclusion:- 

    In conclusion, I would say if you are an aggressive person and want to use your capital effectively by taking a high risk and high returns go for full-service brokerage and if you are conservative about your capital and want to trade only what you can afford then go for a discount broker.

References:-

For Zerodha account opening, you can use my referral:-

https://zerodha.com/open-account?c=SA5886

For Brokerage and Tax calculation:-  https://top10stockbroker.com/brokerage-calculator/icici-direct-brokerage-calculator/

You can get a comparison among brokers here:- https://top10stockbroker.com/broker-comparison-stock-brokers/