How do stock brokers make money?

Short Answer

Stock Market is always at risk and involves around a lot of aspects. A daily news viewer also needs time to understand what is exactly going on. To actually dive into the world of stocks, it is important to read about the companies and their strategies and that is what stockbrokers do. They understand the company, do their research and expect the price of stocks by studying the company's ways of dealing with stock market strategies and also about the market forces. Let us now go through the actual topic and understand things better.

Detailed Answer


  • A stockbroker is a person who will purchase and sell the stocks in the stock market on behalf of their clients.
  • They can be termed as middleman as they are the ones who deal between both stocks and their clients.
  • They are also the investment advisor as they only suggest when and on which stock should their client invest for the stock to be profitable.
  • The majority of stockbrokers practice for a brokerage company and deal with a range of individual and corporate clients.
  • Full-service brokers, who provide advice and financial analysis in addition to performing trades, are also used by wealthy individuals and organizations.
  • There are three types of Stockbrokers: Direct access brokers, Full-service brokers, and Discount brokers.


To begin with, it is a myth that a stockbroker earns million money as even they lose money due to unexpected trading variations and other trading activities. There is not any limit like how much does a stockbroker make it all depends upon their knowledge and the way they trade. Basically, it is all about being skilled and unskilled in terms of experience, a skilled trader can even earn lakhs per day when they invest in crores.


Stockbrokers make money in various ways some of which are as follows:

  • Referral bonuses:

You must have noticed that from time to time you are pressured by the stockbrokers to buy some specific stocks, investments, mutual funds, etc., it is then that they charge you trader or broker referral fees because they just recommended you that specific stock and will offer you to make investors enroll in it. There are chances that it can be either a good or bad stock, so you need to be mindful when if take up such chances as sometimes investors end up loosing a lot of money if they did not make a right choice.

  • Broker fees:

These are charged by the stockbrokers when they advise their clients on which stock they should invest on a varied scale and hence, it is very expensive. These are usually the advises made on an individual basis as in when the investor asks its personal broker for advises for which stock they should invest on and which will be more profitable after studying the stock and the company they plan to invest in.

Therefore, different stockbroker and people have different subscriptions and requirements, so they charge these fees accordingly.

  • Commissions:

If you make a lot of trades, you might think you are paying a lot in commissions, but commissions make up a small portion of a brokerage's revenue but The PayScale survey by stockbrokers shows that Commissions are the greatest component or primary source of salaries in this field (and the most variant source). As in many sales occupations, reputation and rewards, wages frequently become a marginal part of the full income, the more the broker hopes to earn commissions.

But the general fact is, an experienced broker will always charge you a heavy amount as commissions.


  1. Zerodha
  1. Upstox
  1. SAS Online
  1. 5Paisa
  1. Angel Broking
Tagged With: stock marketstockbrokercareertraderstocks
Categories: Stock Market
Ask your query and our expert community would be happy to help
Discussion (1)

    Stockbrokers have several ways of making money. However, due to new SEBI rules on margin trades, the cash flow of traders might reduce based on the volume of trades declining. But no one can predict the future as to whether these rules would be reversed. Only time would tell.

Related FAQs

Is Paytm Money Safe and reliable Broker for Stock Trading & Investing?

Yes, it is completely safe to invest your money in the stock market using Paytm money App. In fact, PayTm has come up with stock broking services recently and trying to establish itself in the said field. And, to give tough fight to top existing players it has to keep its services up to the mark. Paytm Money made a big name in mutual fund investment industry and now it's time to see its performance in the stock brokers' world.

Is it possible to make Rs.5000 to Rs.50,000 of profit in a single day in the stock market?

Generating 1000 times returns in the stock market is highly unlikely but not impossible. However, through aggressive trading, scalping techniques, trading in penny stocks, strategies for trading, technical analysis and trading with the market trend, you could get the relevant returns you’re looking for, provided everything favors your decision-making in the desired investment opportunities.

How to use VectorVest to make money?

VectorVest is a stock advisory and market analytics platform that provides many tools and facilities to investors as well as traders. There are many tools available on the Platform like WatchDog, ProTrader, etc, that can be used by you to earn money on a regular basis.

What are important things to keep in mind for stock market beginners?

For any beginner who is getting started in the stock market, you need to be aware of the broker you choose, the investment strategy, not letting emotions play in your investment and trading desires, and not trading with money that you can’t afford to lose.

How can I buy a stock without a broker in Canada?

Canadian citizens above the age of 18 can open a TFSA (Tax-Free Savings Account) in which you can contribute up to $6000 annually. This can be in the form of stocks or other securities. You can also use an RRSP (Registered Retirement Savings Plan) where you can contribute a higher sum which will be taxable, unlike the TFSA which is completely exempt from taxes.

How much money can you make as an Options Seller?

Option Selling can be considered as a full-time business for traders. Similar to a business, you cannot expect extraordinary returns in options selling. You, as an options seller have an edge over option buyers and the chances of making money are higher. Know how much money can be made by selling Options.

Who is the No.1 Stock Broker in India?

When talking about the best stock broker in India, we cannot rule out Zerodha. It is the market leader in bargain stockbroking, is premised in Bengaluru, and accounts for more than 15% of total retail trading activity in the country. Mr. Nitin Kamath formed the leading brokerage firm in 2010 Kamath, and it now has a customer base of over 6 million.

Can I do stock trading in India without a broker?

To buy and sell stocks in the Indian stock market, you will need a demat and trading account. A stockbroker is necessary to trade stocks because the broker will provide the trading account through which you will place your trades.

Can I open 2 demat accounts with different stock brokers?

You can open more than one demat account as long as you open them with separate depository participants. It is completely legal to own multiple demat accounts but you cannot have more than one account with a stockbroker.

Which is the best stock broker for beginners in India?

Discount brokers have gained a lot of popularity in the past couple of years. Zerodha is currently India's largest and most trusted discount broker which is also the best option for beginners. It has all the necessary qualities required for a good broker like low commissions, low-maintenance charges, high-quality trading terminal, etc.