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Brokerage & How Brokers Earn

beginner6 min read

What you pay your broker per trade, and how flat-fee pricing changed the game.

BrokerageAn intermediary licensed to execute your trades. is the fee your brokerAn intermediary licensed to execute your trades. charges to execute a trade. It used to be a percentage of the trade value — painful on large orders. The discount-broker revolution replaced that with a flat fee (often ₹20 or less per executed order, and frequently ₹0 for deliveryBuying shares to hold in your demat beyond the day.).

How brokers actually make money

Beyond brokerageAn intermediary licensed to execute your trades., brokers earn from interest on idle client funds and marginThe deposit required to hold a leveraged position. lending, fees on premium features, and (controversially) order-flow and float. Knowing this helps you see why “zero brokerageAn intermediary licensed to execute your trades.” is rarely zero cost overall.

A percentage fee scales with your trade size; a flat fee doesn’t. On a ₹5 lakh trade, 0.3% is ₹1,500 vs a ₹20 flat fee — a 75× difference. For anyone trading meaningful sizes, flat-fee broking is one of the easiest large savings available.
Key takeawayBrokerageAn intermediary licensed to execute your trades. is the per-trade execution fee; flat-fee (discount) broking massively undercuts old percentage models, especially on large trades.
FAQs
Is “zero brokerage” really free?

Brokerage may be ₹0 (often for delivery), but you still pay statutory charges (STT, exchange, GST, stamp duty) and the broker earns from float, margin interest and other fees. “Zero brokerage” ≠ zero total cost.