About Brokerage Calculator
Understanding the financial implications of trading stocks entails grasping various associated costs, among which brokerage fees stand prominently. These fees, constituting the compensation paid to brokers for facilitating trades, typically manifest as a percentage of the transaction volume.
The significance of comprehending brokerage fees becomes apparent when considering their potential impact on your profits, particularly in instances of frequent trading activity. The brokerage calculator is a powerful tool designed to empower investors by providing them with a comprehensive and user-friendly way to calculate brokerage fees associated with their investment activities. Whether you're just starting or already know a lot about investing, keeping track of fees with a brokerage calculator can help you make smarter decisions.
This user-friendly tool streamlines the process of determining brokerage fees, requiring only fundamental inputs such as stock prices and transaction volumes. Regardless of one's proficiency level, the brokerage calculator simplifies fee assessment, enabling investors to navigate their financial portfolios with precision and ease.
What is a brokerage calculator?
A brokerage calculator is an online tool offered by brokers and trading platforms to help traders calculate brokerage before carrying out a trade. It is useful in estimating the fees associated with a trade. An online brokerage calculator estimates trade costs using the following variables:
- Segment (Intraday/Delivery/F&O)
- Purchase price of a stock
- Sale price of a stock
- Total number of shares to be bought/sold
Apart from calculating brokerage, a brokerage calculator also estimates other trading charges like transaction fees, stamp duty, securities transaction tax (STT), GST, and SEBI turnover fees. In other words, a brokerage calculator simplifies the process of calculating the cost of a trade.
Automated brokerage calculations allow traders to compute trade costs instantly, ensuring speedy trades. Trading calculators are especially helpful for intraday traders who need to time their trades to capitalise on returns.
What are the types of brokerage calculators?
There are three main types of trading calculators:
Equity brokerage calculator
This type of brokerage calculator is used to calculate brokerage and other fees associated with intraday equity trading, delivery equity trading, and F&O trading.
Commodity brokerage calculator
A commodity brokerage calculator estimates the charges as well as the break-even points for MCX commodity trading.
Currency brokerage calculator
A currency trading calculator can be used to estimate the fees for currency trading on the NSE.
How to calculate brokerage?
As mentioned earlier, traders use intraday brokerage calculators and other similar calculators to estimate brokerage charges and understand the cost of each trade. Brokerage charges are the fees brokers collect in exchange for facilitating trades. Brokerage charges are payable both when buying and selling securities. While some brokers may exempt one of the two from charges, most levy a certain percentage of the trade value as brokerage fees. Brokerage is calculated using the following formula:
Brokerage = Number of shares bought/sold x Price of one share x Brokerage percentage (as per the applicable subscription pack)
Let’s take an example to better understand how brokerage is calculated. Let us assume Snehal buys 10 shares of company XYZ at Rs. 3,000 per share. She sells them for Rs. 3,100 each after 10 days. Let us assume that Snehal’s broker applies a brokerage fee of 0.5% on the traded value. In the given example, Snehal’s total trade value stands at Rs. 61,000 [(10 x 3,000) + (10 x 3,100)]. Since the brokerage is charged at 0.5% of the traded value, the total fee payable to the broker is 61,000 x 0.5% or Rs. 305. It is important to note that brokerage charges vary across the industry and also vary across equity delivery, intraday, and F&O trading segments.
Factors on which brokerage calculation depends
When using an equity brokerage calculator, your brokerage calculations depend on the following factors:
Buy/sale price
The buy or sale price of a single unit of security impacts brokerage calculations. Generally, the buy/sale price is directly proportional to the brokerage payable.
Transaction volume
Trading calculators estimate brokerage based on the transaction volume. The larger the volume of the trade, the higher the brokerage. However, some brokers may reduce the commission percentage on large orders beyond a certain threshold.
Type of broker
Brokers in India fall under two broad categories: full-service brokers and discount brokers. Full-service brokers charge a higher brokerage fee in exchange for the extensive range of services offered, including stock research and advice. Discount brokers, on the other hand, extend only a basic trading toolkit to traders and charge a considerably smaller fee. Usually, discount brokers levy a flat charge on every executed order rather than charging a certain percentage of the trade value.
How to use a brokerage calculator?
Equity calculators help traders compute brokerage charges on a trade. They help reduce the manual burden and possible errors in such calculations. To gain clarity on your brokerage fees in an instant, you can use the simple and user-friendly Brokerage Calculator by Bajaj Broking. Here’s a step-by-step guide on using the brokerage calculator:
- Step 1: Choose an appropriate subscription pack from the drop-down menu – Freedom or Professional.
- Step 2: Select the trade segment - intraday-equity, delivery-equity, futures, or options.
- Step 3: Enter the buy price.
- Step 4: Enter the sale price.
- Step 5: Input the quantity.
- Step 6: Select the stock exchange where the security is listed.
- Step 7: Click the ‘Calculate Brokerage’ option to compute the applicable charges.
The online trading calculator will instantly display the applicable brokerage fee, STT, GST, SEBI turn-over fees, and stamp duty charges. In fact, you can also review the break-even and net profit and loss amount on the trade. Assessing the charges levied and their impact on the overall profit/loss can help you decide if the trade is prudent.
Other charges on trading
When understanding the nuances of a brokerage calculator, it is also important to understand the other charges imposed on trades:
GST
A Goods and Services Tax of 18% is applicable on the service rendered by brokers.
Transaction fees
Transaction fees are the charges imposed on trade execution by the stock exchange and clearing corporations. These fees can vary depending on the trade value and type.
Stamp duty
Stamp duty is imposed by the concerned state government on the transfer of security. From 1st July 2020, stamp duty is uniformly charged on the basis of the transaction value of the trade.
STT
Securities Transaction Tax is applicable on the purchase/sale of each listed security, including equity shares, equity-focused MFs, and derivatives. However, STT is not levied on commodity and currency trades. STT is charged at 0.1% on the purchase and sale of equity delivery trades, 0.025% on the sale side of the equity intraday trades, 0.01% on the sale side turnover of futures trades, and 0.06% on the sale side turnover of options trades.
CTT
In India, a Commodities Transaction Tax is applicable on trades of non-agricultural commodity derivative contracts. A CTT of 0.01% is payable by the seller on the price at which the commodity derivative gets traded. For options, a CTT of 0.05% is payable by the seller on the option premium. For sales of options where the option is exercised, CTT is charged at a rate of 0.0001% on the settlement price.
SEBI turnover fees
SEBI (Securities and Exchange Board of India) charges a fee of 0.0001% of the turnover (or Rs. 10 per crore) on all purchase and sale transactions in securities.
DP charges
DP charges are applicable on sale transactions and vary depending on the depository in question. CDSL charges Rs. 18.50 per day per script, while NSDL charges Rs. 17.50.
Factors influencing brokerage charges
The following factors influence brokerage charges for your trade:
Nature of trade
Generally, brokerage charges vary depending on the type of trade in question. Intraday and delivery trades are the two major types of trades in the stock market, and the brokerage cost for each varies.
Traded securities
Brokerage charges may vary depending on the securities traded. Equity, derivatives, commodities, and others may have different fee structures.
Trade segment
The market comprises different trade segments, such as derivatives, spot/cash, etc. The brokerage fee charged may depend on the segment where you place the order.
Asset price
Some brokerage calculations are based on a certain percentage of the total turnover of a trade. In such instances, the asset price becomes one of the chief factors influencing brokerage charges.
Trade volume
The asset quantity in trades plays a crucial role in determining the applicable brokerage charges. Larger trades often attract higher brokerage fees, especially under a percentage-based system.
Frequency of trades
Brokerage charges are often determined by the number of trades executed. Depending on the brokerage firm in question, traders can subscribe to volume-based plans, where the more they trade, the less brokerage they pay.
