Capital market trading in India is very expensive, and we end traders are responsible for this, we never asked our brokers and statutory bodies why there is this loot.
This post is my rant be heard by brokers community who failed to bring helpful solutions designed from end users angle, Indian brokers seem to care only for their own profit and no mercy for the guy who worked day & night to fill their pockets. Typically almost all brokers in India with a few exceptions charges a flat brokerage irrespective of whether you profit or lose. This is a one-fit-for-all kind of situation, where no consideration is given to day traders.
Most of these brokers assume that, in your derivative trades you will make or break in thousands, for example if a trader buys 3 lots of put option which may becomes four times in value, that trader just made 20k in a single trade. Unfortunately in India options trading is often seen as gambling where punters bet and look for huge rewards. This kind of mindset again encourages brokers to charge high.
With such big amount of profit ( or loss ), your broker now won’t let you go away with all that money, they expect few rupees paid, which is understood as justifiable desire from their side. Thing is that those brokers themselves evolved doing such kind of punter style trades, and there its natural for them to see world from their biases. But think about those large number of day traders and scalpers around us, who aim for small profit and provide liquidity to market. And mostly they do rarely trade more than 1 lot – how does a flat brokerage model helps them?
A brokerage must never be flat fee – it should be calculated by some % of your profit, and duration of time, that position was held, for example if a trade brings no profit then broker cannot charge, similar if position is squared off within 5 min, again no brokerage is applicable. We all know that in India there is system of turnover brokerage commonly known as transaction charges so small % brokerage they anyway make.
So dear trader, wake up and spread this message to your fellows and ask your broker.