How a zero-commission trading account can boost stock-market returns

The soaring popularity of stock market trading in India has turned the spotlight on the costs of trading and how to cut down on those. Thus, choosing among trading apps such as Lemonn, INDmoney, and 5paisa has become all the more important.

Each trading platform has its USPs, which draw investors depending on what they are looking for. Lemonn, for instance, has rolled out an introductory offer of a free brokerage account for a year, in addition to other features such as curated portfolios for new traders.

Understanding zero brokerage trading

Zero brokerage trading is a stock market trader’s dream come true. In a zero brokerage platform or app, traders do not have to pay transaction fees for buying and selling stocks. Trading fees can often discourage new traders from participating in stock market trading and can also limit the trading frequency due to the transaction cost. However, investors can optimize the overall trading cost with a zero brokerage trading platform. Some platforms charge a flat fee per trade, while some have nominal charges or even hidden charges.

How much does traditional brokerage cost?

In traditional brokerage, the cost depends on the number of transactions, including buying and selling securities. Traditional broker's charges range from 0.01% to 0.5% of the transaction value. This percentage can vary with brokers, who set the charges for the services provided and the type of trade being executed. Factors that determine the brokerage percentage include trade value, type of trade, and volume. The brokerage cost is the primary source of income for the broker, and while they offer lower brokerage to attract more traders, it is no match for zero brokerage.

Understanding the zero brokerage trading model

When the going gets tough, they say, the tough get going. Likewise, the zero brokerage model has upended the traditional brokerage system. Here, investors have the edge as they can divert their funds entirely toward investment and not for paying transaction costs. The zero brokerage model offers a seamless investment journey from opening a trade account to buying and selling securities.

What do brokerage charges mean?

Akin to traditional brokers, there are several charges associated with online trading. They include:

● The standard brokerage fee is for executing the buying/selling of securities on behalf of the traders. This fee percentage can vary depending on the online broker and the fee structure.

● Brokerage fees could vary based on trade value, volume, frequency, and asset type, like equities and F&O (Futures and Options).

● Account maintenance charge is a fixed cost in online stock market trading.

● Charges for accessing premium features within the platform, such as advanced trading features or software.

Advantages of zero brokerage trading account

There are several advantages that a zero brokerage trading account offers. We will discuss some of them.

Cost savings

The absence of trading fees might not seem significant initially, but over time, they can make a huge difference in the overall cost and profit margin. Zero brokerage benefits users immensely, especially intraday traders and active investors.

No charge on stock holding

The zero brokerage trading model benefits investors of all types. For long-term investors who hold their stocks for an extended period, there are no charges for holding stocks.

Security, guaranteed

No charges, however, do not mean lax security. For instance, Lemonn, the platform that offers zero-commission services, provides a secure online trading environment.

Encourages frequent trading

In traditional stock market trading, brokers charge for facilitating each trade, which can vary depending on the size and volume of the trade. This is a significant deterrent for traders. But with free brokerage, traders can make as many trades as they want in a day without worrying about incurring transaction charges.

Choose the right zero brokerage trading account with care

With several stock brokers providing zero brokerage trading accounts, you must pick the one best suited to your trading style and financial goals. To help you navigate through the process, below are some steps you can consider:

Ease of use

Stock market trading is difficult, but you can simplify the process by selecting a trading platform that is easy to use with smooth navigation. This is especially important for those who are new to stock market investment.

Available features

While zero commission can be a good differentiating feature, choosing a broker with other additional features, such as providing advanced charts and analysis tools, can be a bonus.

Accessibility

Ensure that the brokerage platform you pick is easily accessible on a smartphone. Most apps are available on mobile apps these days.

Types of assets

There are so many trading platforms that offer a variety of assets. However, finding a platform like Lemonn that offers zero brokerage and different assets like equity, F&O, and mutual funds will be useful.

Hidden fees

Brokers run their businesses by primarily charging customers to facilitate their trades. So, what happens when the broker offers zero brokerage fees? In some cases, brokers levy hidden charges under the guise of account maintenance charges or service fees. So, do thorough research before you select a platform that offers zero brokerage.

Good customer support

Good customer support is crucial for every service provider. So, pick a reputed platform known for impeccable support. You can validate this by checking their social media accounts or even reaching out to them via email.

Conclusion

Potential investors looking to try their hand at stock market trading can consider zero brokerage trading. By taking advantage of zero transaction costs, traders can execute more trades and increase their potential profit margin. To conclude, zero brokerage is a useful investor-friendly feature that can significantly reduce trading costs.