While brokers advertise of free account opening and demat charges, that would be of little significance given the fact that bulk of the charges that one pays is for broking charges.

It's therefore best to open an account where the broking charges are minimal. There are many brokers that charge a flat fee per trade irrespective of the value. Most brokers in India including the reputed ones like Sharekhan and Geojit charge individuals based on the value.

Take A look At Some Of The Broking Firms That Charge Lower Broking Charges

The problems with low cost brokerage firms

1) You may not end-up getting a physical contract.
2) You may have to pay courier charges for cheque requests.
3) Do not expect delightful service.
4) Physical contracts would be charged at Rs 20 in some cases with courier charges etc.

How low cost share brokerage compare with other brokers?

Low cost brokers compare very very favourably with other brokers. Let's take an example. Normally brokerages charge a fee of around 0.05 per cent for intra day trading (including sell) and around 0.50 per cent for delivery.

Let's see how trading works out. If you buy shares of Larsen and Toubro in the futures market, the cost of a minimum of 250 shares would be 250 x 1680 = Rs 420,000. Now on this if you pay a brokerage of 0.05 per cent for squaring of the trade intra day it works out to Rs 0.05 x 420,000 = Rs 210.

Now, this is really high when compared to Rs 40 (buy and sell) or Rs 18 (buy and sell) you would pay at fixed cost broking firms. Now, let's see how fixed cost broking works for intra day delivery.

For the same 250 shares of L&T you would pay a brokerage of 0.50 per cent for delivery, which works out Rs 2100. This is as against Rs 20 you would pay otherwise for one single trade.

Clearly on every count low cost brokerages are favourable. There are many who say that the service is not up to the mark, though there are many views to the contrary. Given the large investor base they have there maybe worries in solving issues.

But, the systems are so automated these days, there maybe very little necessity for personal intervention.

GoodReturns.in