The low-cost brokerage: it really makes sense

The stock market is considered as the indicator of the growth of the economy. There are various exchanges such as the National Stock Exchange as well as Bombay Stock Exchange with which all the broking houses are affiliated for the trading of different securities.

How do they function?

The orders placed by various broking houses are processed by an automatic system, and according to their sequence, they are executed. The securities trading and commodity trading are different and same is their volume as well as the order size and deposits. However, there are also some similarities between trading of commodity and securities, and the prime similarity is a brokerage. Many commodity broking houses offer low brokerage commodity trading also, but the client must meet the parameters set by the broking house to avail such broking charge scheme. For different commodities, the order size is also different and hence the brokerage generation for the concerned broker is also different.

Why they offer low brokerage charges?

To know why a broking house offers low brokerage charge, one needs to know the commodity market in a little depth. One must know that commodity market is affected by numerous factors which are of a global nature. Hence a shortage in one part of the world may also shoot the price in just a few seconds. In the case of additional supplies of a commodity in one area can also lead to the decline in rates marginally. There are also some commodities which are seasonal and one can expect a higher reward in terms of trade in a particular nature. The commodities such as crude are known for their volatility, and those who have an insight for this commodity can trade in it.

The commodity players offer low brokerage charges to attract more clients which can lead to higher turnover in a limited period and increase overall revenue of the house. There are also some players who have conditions of minimum trades and volume so that the profitability of the broken house can be maintained irrespective of the trend in the market.  Hence it can be a beneficial deal for the trader as well as the broking house.