I hope you are doing well. Today, I was just scrolling my social media platform and I found a post where people are posting about how brokerages are eating their profits.
After reading the comments, I came to know “How aggressively people are trying to find the solution of lower the brokerages”
There is no harm to find a solution where we can find a way to reduce the cost of business But I have a different perspective here.
Trading is a business and like all other businesses, brokerages & taxes are like raw materials. Or in other words, you can say that these are the costs of running a business.
People were making money when brokerages were ₹100/200 per lots. Now brokerages are like ₹20 per order. This means if you are trading with 10 lots, now you have to pay only ₹40 to open and closed a position instead of ₹2000 – 4000 earlier people were paying.
And the best part is there were making money with those high charges also. Now we are crying with ₹40 only.
I believe the problem is not brokerages. The problem is a mindset. As a business person, you have to change your mindset from savings to earning. We have to keep our focus on how to increase our earnings. And to do that We need real skills, discipline, and patience.
Nowadays people things “Brokerages bhi na dena pade aur paise bhi easily ban jaye” and all this is because of social media where people are sharing anything just to gain a few likes and shares without knowing the consequences.
A recent example is there where people lose huge amounts of capital due to a technical glitch of Finvasia. Just to save a few brokerages they added huge systematic risk through an unstable broker. Thoda thoda na deke, ek hi baar mein sab de diya.
So I think we should trade with a stable and reputed broker. Obviously, we have to pay something extra because every valuable thing comes with a certain price. And there is no harm to pay the cost of doing business where you have the security of your hard earned money.
Now the second question, how to reduce your brokerages by increasing your earnings:
- The first thing is analyzing your trading style. If you are earning less you can simply increase your lot size. But for that, you need a high margin.
- Nowadays we have so many options where we can reduce the margin requirements like trade with hedging strategies. Keep your risk limited and when risk is limited, exchange will automatically reduce your margin.
- Another way is reducing the no of orders. I trade with Option strategies where risk is limited and I need to take action only where adjustments are required instead of placing orders every single day. It helps me to reduce my brokerages.
- One more way is to upgrade your learning to increase your earning potential. Remember one thing “There is no such thing as easy money.”
So instead of finding a way to save brokerages, we have to find a way how to increase our profit so that we can easily bear this cost of doing business. Else one day, you will have to pay a huge price for that and you can lose your whole earning with the capital too.
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