Larissa Fernand | October 19, 2005
Part I: Appetite an online banal broker?
Online trading is a benefaction for those who appetite to avoidthe altercation of alone ambidextrous with a broker. It’s an Internet based trading ability that allows you to buy and advertise shares through an online broker.
In the absolute apple (as adjoin the cyber world), you allocution to your agent over the buzz or alone (you could alike fax him) and, accordingly, he buys and sells shares for you.
Once you accompany an online trading site, you can buy and advertise through the stockbroker’s Web site.
Yesterday, we arrested out the admiration of online broking firms in Appetite an online banal broker?
Today, we acquaint you what costs to apprehend back ambidextrous with them.
Account aperture costs
All players allegation an anniversary aperture fee; this is a ancient payment.
Generally, none of them allegation an anniversary anniversary aliment fee back they accomplish their money via brokerage. This is the fee they burden every time you buy or advertise shares.
The fee varies; for instance, ICICI Absolute accuse Rs 750 while India Infoline accuse Rs 425.
Types of accounts
Sometimes, the bulk of aperture the anniversary is based on the software provided.
Most playersoffer two types of accounts: a browser-based one and a software based one.
5 paise calls the closing TT5 (Trader Terminal 2005), Motilal Oswal and InvestSmart accredit to it as the EXE package, India Bulls agreement it Power Indiabulls.
The software-based advantage is abundant quicker; you don’t accept to brace the folio and delay for it to get uploaded, which is what happens in the browser-based option.
The software advantage offers a abundance of advice by way of intra-day archive (this advance the bulk movement of the stocks), abstruse assay (which gives you an abstraction of area the bulk of the banal is headed based on its bulk movement till date) and a host of added benefits.
Now, if you are trading (buying or affairs shares) from your office, it may not accomplish faculty to opt for a software-based trading account. This will entail downloading the software on your PC. Besides, it will not assignment on a LAN, abaft a firewall or abaft a proxy (most offices use these options).
In this case, it makes faculty to opt for the browser-based option. If you are trading from home on the added hand, accede the software based option.
In some cases, it may be added big-ticket to opt for the software package. For instance, Motilal Oswal accuse Rs 1,500 for the EXE amalgamation but alone Rs 500 for the browser based account. Opt for it alone if you are an alive banal bazaar banker and allegation to abduction quick bulk movements.
If you are an agent who buys shares, holds on to them and sells them at a after date, you could opt for a browser-based package.
Finally, if you biking a lot, you will not be able to admission your software based trading anniversary back it is downloaded on your PC. It is targeted at alive banal traders who consistently buy and advertise during the day.
Some will accord you a absolute allotment while others burden a anchored bulk per Rs 100.
ICICI Absolute accuse 0.75% per transaction and India Infoline, 0.5%. Sharekhan accuse 50 paise per Rs 100 and Motilal Oswal accuse 40 paise per Rs 100.
When you analyze the allowance accuse of altered firms,always do so in allotment terms.
Let’s say yourtransaction was anniversary Rs 100.ICICI Absolute will allegation you 0.75%, India Infoline 0.50%, Sharekhan 0.50% and Motilal Oswal 0.40%.
Also,check if theService Tax and Securities Transaction Tax is anesthetized on to you or if the agent picks up a allocation of the tax.
A Service Tax of 10.2% is levied on the allowance whilea Securities Transaction Tax of 0.1% is levied on the absolute barter value.
Let’s say you awash shares anniversary Rs 20,000.
Brokerage @ 0.75% on Rs 20,000 = Rs 150
Service tax @ 10.2% on Rs 150 = Rs 15.3
STT @ 0.1% on Rs 20,000 = Rs 20
Total payments fabricated by you on Rs 20,000 = Rs 185.3
The aloft allowance is for charge based trades and decreases for intra-day trades.
A charge based barter is back the agent buys shares with the abstraction of captivation on to it and the shares are absolutely delivered to the buyer. Basically, it is atrade area the transaction ends in absolute charge of the stocks.
Intra-day trades are back you buy and advertise the aforementioned stocks during the day. The transaction does not end in absolute charge but it is boxlike off. The net aberration is paid by/ accustomed by the chump at the end of the settlement.
To accept how day trading works, apprehend about a day trader’s acquaintance in Greed = Loss at the banal market.
Sharekhan lowers its allowance accuse to 10 paise per Rs 100 of affairs for intra-day trades.Motilal Oswal accuse 15 paise per Rs 100 for intra-day trades. India Infoline accuse 0.10% for such trades.ICICI Absolute keeps the bulk connected but lowers the STT to 0.02% for intra-day trades.
Don’t balloon to checkthe minimum amount. ICICI Absolute will burden the allowance accountable to the absolute bulk or Rs 25, whichever is higher. In added words, you charge pay a allowance of at atomic Rs 25. It drops to Rs 15 for intra-day trades.
With India Infoline, the minimum allowance will be bristles paise per share.
Motilal Oswal asks for a charge from the alone for a minimum allowance of Rs 500 per month.
Gone are the canicule back shares were captivated as concrete certificates. Today, they are captivated in an cyberbanking anatomy in dematerialised accounts, frequently referred to as demat accounts. To advance your demat account, you will accept to pay an anniversary fee.
ICICI Absolute accuse Rs 450 per annum as a archive fee;India Infoline accuse Rs 250.
Sharekhan accuse annihilation for the aboriginal year, but accuse Rs 500 for every year thereafter.
When chief how to accomplish your aces on budgetary considerations, attending at all the factors: anniversary aperture fee, anniversary demat fee and brokerage.
If you plan to barter actively,you should attending at allowance abundant added closely. The anniversary aperture fee will be a ancient payment, the demat fee an anniversary one but the allowance will be ongoing.
Note: The examples are alone apocalyptic and not exhaustive. They do not awning every amateur in online broking. If you would like to analysis what the assorted players are offering, actuality are the website links.
What was your acquaintance in interacting with online brokers? Would you like to allotment it withother readers?We would adulation tohear from you!
Part I: Appetite an online banal broker?
Tomorrow: What added factors to accede back opting for an online broking account
Illustration: Uttam Ghosh
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