All the activities of an individual revolve around earning. There are several options such as a business, profession or job with the help of which one can earn good money and sustain. For some people, the source of making money does not offer enough amount that can fulfilhis requirement and hence one needs to go for some side income. At low capital and moderate risk, what one can go for is trading in the stock market. One can buy the shares of some good companies in the market and sell them when the prices increase. This can help one fetch some difference amount as profit. For a trader, it is much important to know if there are any other charges associated with his trade. There are charges such as brokerage and taxes that one has to pay.
The charge such as tax is not under the control of him as it is government levy that one has to pay,but one can bargain to the stock trading brokers for the brokerage charges. If the client is a cream one with huge volume in the delivery as well as intraday trading, the broker gets prepared to offer him a discount on the brokerage. There are lots of factors that affect the decision of the broker as far as the discount in brokerage is concerned. For a trader, it is a charge while for the broker it is a revenue and hence unless and until the broker is satisfied with the profile of the client, he may not allow the discount.
In some situations, the broker also offers abetter discounton the brokerage. Here are some situations in which the broker offers the account with low brokerage rate.
- New branch: In the event of opening a new branch of a broking company or a broker, one needs to offer adiscounton the brokerage. As the business is new and there is no client, the operators have to get the client base. The lower brokerage rate may induce traders to get an account opened in the new branch and hence the client base can be there in the new branch which can help it to establish as a profit centre in short span.
- Competition: In the event of competition one needs to counter the schemes of the rivals to that the client can shake hands with the new business. In such situation, the rate of brokerage can prove much helpful as for every trader it is a serious issue. For a trader, it is a cost, which if he can reduce, the profit will automatically get increased. To attract such clients, the reduced brokerage rate proves as an infallible
- The mass clients: In some situations, the business looks at a number of If there is any bulk deal of account, one has to offer reduced brokerage rate so that all those who are interested can start trading.
Adding to the situations mentioned above, one can also see low brokerage for cream client and client with big margin money.