Zero Brokerage Trading

Overview

Zero brokerage trading might be a recent buzzword you may have heard about. It is a new way of running the brokerage business and model. Here’s an outline of some of the ways in which brokerage firms work:

Traditional brokerage model

Traditionally, stock brokers made money by charging you brokerage every time you place a trade. This amount of brokerage varied depending on the size of the order that was traded.

E.g: If you bought 5 lots of NIFTY, you would be charged 5 times as much as if you bought 1 lot of NIFTY. This might make sense for the broker, but doesn’t make sense for the consumer.

Zero Brokerage model

Zero brokerage models exist to change the traditional structure. The broker eliminates scaling charges by doing either one of the following:

Offering ZERO brokerage on Equity delivery trading. This is a very attractive for Investors. Charging a flat fee per order traded. For extremely small orders, there is a percentage brokerage system.

Advantages of Zero Brokerage Model

Customers switching to a zero brokerage firm such as Upstox can benefit from features such as:

Low prices
Trade on all major exchanges in India safely.
Free trading software for your desktop, web, mobile and tablet.
Advanced charting and analytic tools in the trading software.
No pesky relationship managers (RM) forcing you to trade so that they can earn brokerage.
No one at a ZERO brokerage firm places an unauthorized trade on your account. Every order placed recorded in a phone call and verified with personal security questions.
Transparent rules and fees.
Easy account opening procedures.
Instant fund transfer to and fro.
Intraday margin facility to give clients leverage on their margin money.
Instant phone and email support.
Free demo and trial facilities.

Effect

The first and foremost effect of this model is that the trader saves more money with a zero brokerage model than a traditional firm. Apart from that customers have also started to trust the brokerage industry.