InvestorQ : What is the importance of negotiating brokerage in intraday trading?
Abhisha Yadav made post

What is the importance of negotiating brokerage in intraday trading?

Abhisha Yadav answered.
3 years ago

When it comes to intraday trading, remember that the brokerage calculation matters a lot because you are working on extremely thin spreads and churning your money often. In fact when you are churning your money rapidly, the brokerage effect gets multiplied and hence becomes all the more critical. Keeping your brokerage rate as low as possible is the key to being profitable in intraday trading in the longer term. Of course, do not compromise on the basic quality of services in intraday trade but today the best of brokers is willing to give you an extremely reasonable intraday trading experience.

When you are buying shares for delivery in the long term, then the brokerage rates may not matter too much. For example if you are targeting a 60% return on the stock over 2 years, then it does not matter whether the delivery brokerage is 40 basis points or 50 basis points. In the final analysis, the difference may be marginal. But when you are churning the capital quickly intraday and working on very thin spreads, then the brokerage rate will matter a lot. When you are an intraday trader, you pay brokerage both ways. That means your break even calculations actually need to factor in that cost.