For many people, stock trading is not an activity but a business. Like many other businesses in the market, one has some risks associated with this market also. Hence one has to act cautiously while dealing in this market and particularly if one goes for day trading. In this market, one can have two options which are known as intraday trading and delivery based trading. In the intraday one has to get out of the position on the same day only while in delivery one can make the payment of the concerned shares and hold the position for a long time.
The trading:
Both of the options have their benefits and limitations which one has to consider while going before any of these options. In both of these trading, one has to pay brokerage to a broker with whom he deals. One can find the brokerage calculator as per which he has to pay the required amount which is an expense to him.
For the broker it is income, and hence many of them do not allow any negotiation on this front. The main aspect for the trader is to earn a profit, and if the brokerage rate is high, he may have to book loss just to pay the brokerage. The brokerage is a concern for every trader, and hence for the trader, it is necessary to find the right broker who can offer the required services at a low rate than the normal rate of brokers.
Many times the trader is ready to compromise with the services he gets, but he is not willing to pay the high amount as brokerage, and hence every trader loves to find the broker who is ready to offer a discount in the brokerage.
Why the traders want a discount in brokerage?
For a bulk trader, the amount of brokerage becomes a significant part of his income. If he pays the amount to that extent, his profit gets reduced. If he can save a part of the same amount also, he can reinvest the same in the market and increase the size of the portfolio in a few trading sessions. Hence the turnover can increase which can again lead to an increase in profit, and not only the trader but also the broker can earn a good income. Hence the traders need to have a discount in brokerage.
Usually, those brokers who offer full-services do not allow the discount, and hence their rate of brokerage is higher than the discount broker. From the viewpoint of business also it is necessary for the trader to go for the broker who is ready to offer the required services at a low brokerage rate.
Due to the bulk volume of the transaction, for a trader every penny matters. The market has some discount brokers who offer trading services at a discount rate which can help the traders get desired the style of trading at low cost and hence improve not only the volume but also increase the transaction amount. This leads to many benefits to the trader as well as the broker.