WTH, what is this 0.2% and 0.02%?
This was the first question when, for the first time the words like ‘Stock Market’, ‘Shares’, etc. had buzzed in my ears. I could roughly figure out that they were some sort of rates, but for what, that I coultdn’t figure out.
So, I aksed my RM about this. (Lesson: You should always ASK what you do not know. It can be really loss-some to enter the markets without complete knowledge.)
When one trades in the stock market, one can either buy or sell the shares of listed companies. For each transaction that you make, either BUY or SELL, your broker charges you a Brokerage. The rates given above are Brokerage Rates.
Now, the transactions are of 2 types – Intraday and Delivery. Intraday is that transaction in which you buy shares and then square of your positions (sell your holding shares) on the same day.
The Delivery transaction is which in which you buy some shares, and at the end of the day the shares get transferred (delivered) to your Demat account. And, you may then either hold them or sell them on the day other than the day on which you bought. These transactions are called Delivery transactions.
The 2 brokerage rates given above applies to each of these transactions. Intraday transactions are charged @ 0.02% of the total value of your transaction and Delivery transactions are charged @ 0.2%.
The brokerage is charged on the total value of the transactions, either it be intraday or delivery. For example, I buy 100 shares for Rs. 10 each, the total value of my transaction is 10*100 = 1,000. So, the brokerage would be charged on 1,000, depending on whether at the end of day it is an intraday transaction or delivery.
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