How Margin & Brokerage Play An Important Role In Investing

‘Technical Analysis takes the biggest piece of cake.’
‘Fundamental Analysis guarantees success in the long run.’

Have you been on the listener’s end for all these proclamations? If so, you are not the only one who faces the walls of confusion revolving around the stock market. New or struggling traders and investors always ponder on the right strategies or any bulletproof approach toward the stock market for making profits. However, the irony is that despite the long history of financial markets, there has never been any proven or solid approach toward the market. Every investment strategy has its own story and is considered legitimate unless the individual investor or trader is inconsistent.

In contrast to investment strategies, several elements must be considered before stepping into the market. The foremost is choosing the right share trading app out of the many which are available out there. Attributing to the age of digitalization and its advancements, there has been a rise in several trading platforms and applications providing services to investors and traders alike. While every application prioritizes convenience, it is pertinent to rely more on the brokerage fee and the margin trading offered by these applications.

  • What Is Margin?

If you are using a share market app to invest in multiple segments apart from equity, you may have heard of this term often. Margin is one factor that facilitates an investor’s buying power in certain investment segments, thereby paving the way for better profits in a short period. The significance of margin is evoked when an investor is short on funds yet not on investment decisions; herein, irrespective of the shortage, the investor can leverage their capital and potentially see a larger return scale.

  • Margin & Brokerage Fees

Every share market trading app is entitled to charge you a brokerage fee for the investments you make through their platform. While a brokerage fee is their right, evaluating the percentage of brokerage fees they charge for every trade you make is crucial. Some platforms are known for overcharging their users with brokerage fees when the investment segments are more in count. Yet, some platforms also charge no brokerage fees on some segments, such as the equity market. Below are a few pointers for margin and brokerage that an investor should be aware of.

  1. Margin Interest

While these platforms offer margin on your investment, they are also associated with interest and charges that may exceed your expectations. Hence, before analyzing any platform or application, as per your frequency of margin trading & requirements, you must comprehend and compare the interest rates and fees of all the applications on margin.

  1. Brokerage Fees

Brokerage fees largely depend on the quantity and price of the stock that you have chosen. The efficient solution is to read the brokerage fee structure of all the applications, as a brokerage fee that exceeds the usual percentage would highly impact the profits or investment returns you make.

  1. Understanding Different Types of Brokerage Fees

Some platforms charge different brokerage fees on each trade, such as commission fees, maintenance charges, charges for being inactive or being a user of their premium features, etc. All these factors need careful consideration before choosing your application.


Although brokerage fees and margin interest rates are perceived to be lower, within a single digit, the accumulation of all these charges may take away a significant part of your gains in the stock market.

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