How is transaction cost important in trading and how to reduce it
Trading as a career opportunity is thought of many people now a days especially youths. But before considering trading as a career opportunity many things need to be taken care of. While trading is different from investing, people who wants to become professional traders, should follow.
Trading comes with lots of transaction charges, these charges always paid by you whenever you trade.
Lower transaction cost will increase you profit in trading.
What are different transaction cost incurred while trading?
- Security transaction tax
- Transaction charges
- SEBI charges
- Education cess
- Higher education cess
- Stamp duty
- Brokerage
- Service tax
You pay these 8 different charges, when you do a transaction in stocks, futures, options or currencies.
Where you can reduce the cost in trading?
This can be reduced in the brokerage charges that vary from broker to broker. Now, just take a look at example:
If you are trading with Angel broking, then for Futures trading they charge 0.05%. That means if you buy Nifty future at 7500 so you will need to sell it above 7507 to start making profit. That’s about 7 points.
What we offer is, if you buy Nifty future at 7500 and if you sell it at 7501.25, you will still make a profit. Therefore intraday traders can maximize profits by reducing the cost of transaction.
For Nifty options traders, if you buy nifty 7500 call at 100 and sell it at 100.3, i.e selling it higher by 30 paise, you will still make profit. This is possible when brokerages charges are very low, we offer lowest every brokerage to our site visitors.
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Source: http://ournifty.com/transaction-cost-important-in-trading-low-brokerage.html
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