Home/Blogs/How to Calculate Brokerage Charges for Trading

How to Calculate Brokerage Charges for Trading

stock market
08 Jan 20226 mins readBy MOFSL

When a trader trades in shares, there are a lot of fees linked with the process of trading. These may include such fees as Security Transaction Tax, stamp duty, brokerage charges and more. It's important for traders to know about all these and how they’re reflected in amounts charged for trades made. It's easy to compute all these with a brokerage calculator.  

  • What are trading charges? 

You could say that brokers are agents who help traders to buy and sell stocks and shares. They may also aid investors in purchasing investments such as futures and options, and other financial assets. Brokers charge fees for all the services offered by them. This is known as a brokerage. Primarily, two kinds of brokers exist and fees are charged according to the type of broker investors opt to get the services from. 

  • Types of Brokers

Services of brokerage are offered to investors by the following types of brokers who charge brokerage charges: 

Discount Brokers - Offering investors an extremely efficient platform to execute trades, discount brokers don’t give investors any tips or advice. They, instead, charge investors a fixed rate for each trade made. For instance, this may be a flat rate of Rs. 10 or Rs. 20 in the event of delivery trading or intraday trading. Moreover, some of these may not even levy a charge for services of delivery trading. 

Brokers Offering Full Services - Brokers that offer investors full services are conventional brokers. Their trading charges are more than those of discount brokers as they offer  investors a gamut of services, including advice and suggestions, management of assets, etc. They will most probably charge investors anywhere from 0.01% - 0.50% on delivery and intraday trading. 

  • How to Calculate Brokerage Charges

Although it's simple to calculate fees and charges through an online brokerage calculator, you may want to know the break-up of components and how charges are basically levied. This is best explained through a simple example:

Say a broker charges fees of 0.05% for intraday trading, this essentially translates to brokerage fees on the full turnover. If the security you buy has the value of Rs. 100, the brokerage charges will be 0.05%, which equals Rs. 0.05. The full brokerage charge on the total trading is Rs. 0.05 plus 0.05 = Rs. 0.10 (for selling and buying). Furthermore, the brokerage gets computed on the total price of the stocks based on the percent determined. So the formula to calculate brokerage is the following: 

Assuming that the fees for intraday trading is .05%, and for delivery is .50%, then - 

  • Brokerage for intraday trading = Market rate of a share x amount of shares x 0.05%
  • Brokerage for delivery = Market rate of a share x amount of shares x 0.50%

Get the Best Out of Trading

You can get a great broker if you start trading with Motilal Oswal. Check out the brokerage plans on the website and get online share trading activity going.

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account 

 

Popular Stocks:  HDFC Bank share price | ICICI Bank Share Price | UPL Share Price | Tata Consumer Share Price | Divislab Share Price

Disclaimer: The stocks, companies, or financial instruments mentioned in this blog are for informational purposes only and should not be considered as investment recommendations. It is advised to consult with your financial advisor before making any investment decisions. Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Investors are strongly encouraged to carefully read the risk disclosure documents prior to participating in market-related investments or trading activities. Due to the volatile nature of financial markets, no guarantees can be made regarding investment returns. Motilal Oswal Financial Services Ltd. does not offer any assured returns on market-linked securities. Please note that past performance of stocks or indices is not indicative of future results.
Open Demat Account
I wish to talk in South Indian language
By proceeding you’re agree to our T&C