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# How to Calculate Brokerage Fees Online

## Introduction

When you trade in shares, there are many types of fees you need to pay to undertake a particular transaction. These include service tax, Security Transaction Tax (STT), brokerage charges, stamp duty, and many more. The most common trading fees are brokerage charges and STT.

Brokerage refers to the amount of money you must pay to the broker to complete a particular transaction. It is a percentage of the total cost of shares bought or sold. The fee is over and above the price of the initial trade and deducted from the traderâ€™s account. In very few exceptions, brokers charge the fee only once for either buying or selling stocks.

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## How to calculate brokerage fees?

You can calculate brokerage fees using an online brokerage calculator or the brokerage formula. A brokerage calculator allows you to calculate and compare brokerage charges for futures and options, currency, equity, commodities, intraday, and carry-forward transactions. The tool also calculates other charges the broker will collect, like Goods and Service Tax (GST), Securities Transaction Tax (STT), transaction charges, state-wise stamp duty, etc.

A brokerage calculator simplifies the process of calculating the cost of trade significantly. You just need to input the buy or sell price, the volume, and the trading frequency. The calculator will instantly display an accurate value of the brokerage fees.

The formula for calculating brokerage is as follows:

Brokerage = Number of shares bought/sold x Price per stock unit x brokerage percentage

Online brokerage calculators apply this formula for delivery trading and intraday trading brokerage calculations.

The following example can help you better understand the calculation.

Suppose you purchase 10 shares of Reliance Industries at â‚¹2500 each and decide to sell them at â‚¹2600 within 10 days. Your broker charges 0.5% as brokerage charges. To determine the brokerage charges, you must calculate the entire trade value.

The different metrics required for brokerage calculation are mentioned in the table below:

 Description Value Buying value 10 x 2500 = â‚¹25,000 Selling value 10 x 2600 = â‚¹26,000 Brokerage percentage 0.50% Total trade value (buying + selling) 25,000 + 26,000 = â‚¹51,000 Brokerage charges (51,000 x 0.5%) â‚¹ 255

The above example helps you learn how to calculate brokerage fees manually without using an online calculator.

## Factors affecting brokerage charges

### 1. Buy/sell price

One of the major factors affecting brokerage charges in the share market is the buy or sell price of a single unit of security.

### 2. Transaction volume

The second essential determinant of brokerage fees is the volume of the transaction. The brokerage amount for a large transaction volume is high. Similarly, a smaller transaction volume means a lower brokerage amount. Nonetheless, brokers also lower the commission percentage when investors trade in large volumes.

### 3. Type of broker

Indian brokers are classified into two categories - full-service brokers and discount brokers. Full-service brokers offer many services related to trading in securities, like advising, sales management, researching, etc. Thus, these brokers have higher brokerage charges.

On the other hand, discount brokers offer a trading platform with a relatively smaller brokerage fee. Such brokers impose a fixed percentage without any changes based on the size of the trade value.

## Benefits of calculating brokerage charges online

An online brokerage calculator offers many benefits:

• Allows investors to calculate and compare the brokerage fee levied by different brokers
• Provides calculations for all the trading charges, including STT, GST, custom duty, and so on
• Displays accurate results instantly, helping you know the fees before undertaking any transaction
• Gives valid and relevant results based on accurate and precise data
• Eliminates the chances of errors in manual calculation
• Helps to maintain transparency between the investor and the broker