Brokerage
Brokerage is the fee a broker charges for executing your buy or sell order. It is one of the costs of a trade. Brokers charge it in different ways, so the exact amount depends on the broker and the plan you choose.
How brokerage is charged
Brokers commonly use one of a few models. Some charge a flat fee per order, whatever the size of the trade. Some charge a percentage of the trade value, sometimes with a cap or a minimum. Some plans charge nothing for certain kinds of trades and charge for others. Brokers change their plans, so read the current charges on your broker's own schedule.
Other costs on a trade
Brokerage is not the whole cost. A trade also carries taxes and statutory charges, such as the securities transaction tax, exchange charges, GST on the brokerage and stamp duty, and a depository charge can apply when shares leave your demat account. The rates are set by the government, the regulator and the exchanges, and they can change, so look at the contract note your broker sends for the exact figures.
Why it matters more for frequent trading
Charges are paid on every trade, whether it makes money or not. For someone who trades rarely they are small in the long run. For someone who trades many times a day, the charges add up and have to be covered before there is any profit. This is one reason intraday trading is harder than it looks.
What brokerage does not buy
Brokerage pays for execution of an order you have already decided on. A broker does not decide what you should buy, and a low fee does not make a trade a good one.
Charges on a round trip (hypothetical numbers)
Suppose a broker's plan charges a flat ₹20 per order. You buy shares worth ₹10,000 and later sell them. That is two orders, so ₹40 of brokerage, plus taxes and other charges on top. If the shares gained ₹100, the brokerage alone would take ₹40 of it before the other charges.
Common questions
- What is brokerage in simple words?
- The fee your broker charges for carrying out your buy or sell order.
- Is brokerage the only charge on a trade?
- No. Taxes and statutory charges, and sometimes a depository charge, are added.
- Do I pay brokerage when I lose money?
- Yes. Brokerage is charged on the order, whether the trade ends in a gain or a loss.
- Where can I see the exact charges for a trade?
- In the contract note your broker sends, and in the broker's own charges schedule.