It is an online device that brokers and other investorsoffer at the distribution of traders to facilitate brokerage calculation in advance of carrying out a trade. But, a brokerage calculator can be used in calculating brokerage. It also calculates stamp duty charges, transaction fees, Goods and Service Tax (GST) along with Securities Transaction Tax (STT).
Thus, a brokerage charges calculator is the process of calculating the cost of trade. A person would need to input the following information in an online brokerage calculator to calculate their cost of trading –
- Purchase price of a stock.
- Sale price of a stock.
- Total number of shares to be purchased or sold.
- State (for stamp duty).
- Size of a lot.
Such a calculator givesexact information about such cost, thus facilitating speedy and timely trading. Thus, it is the most important for traders who depend on timing extensively to carry out their trades, like intraday traders. They can use an intraday brokerage calculator to make the process easy of cost analysis before purchasing and selling securities.
How to Calculate Brokerage?
Brokerage charges are the fees that brokers gather from traders to make the trade easier. Therefore, investors need to pay brokerage fees both while selling securities and also while purchasing them. However, certain brokers may consider excluding one event from any kind of charges.
However, most brokers impose a specific percentage of the trade value as their brokerage fees. Based on the scale of trade value, such percentages may differ.
The formula for calculation of the brokerage is:
Brokerage = Number of shares sold/bought x Cost of one unit of stock x brokerage percentage
Brokerage calculators use this formula for both intraday trading and delivery trading brokerage calculations.
An example has been given:
Rahul decides to buy 20 shares of Hindustan Limited at Rs.2000, and in 10 days, he sells those at Rs.2100. He does it through a Broker Y who charges 0.5% as brokerage fees.
Here, Rahul’s total trade value will be:
Rs. [(20 x 2000)+(20 x 2100)]
Or, Rs. (40,000 + 42000) = Rs.82,000
Since Broker Y charges 0.5% as brokerage, the total fee Rahul pays to the broker is:
Rs. (82000 x 0.5%) = Rs.410
So, Rahul would pay Rs.410 as a brokerage for carrying out transactions of Rs.82000. But, if he carried out a transaction on which brokerage is too low, then a broker would have charged the minimum amount which is usually Rs.20 – Rs.30.
Factors on which the Brokerage Calculation Depends
Factors on which the brokerage calculations depends are –
1. Purchase / sale price: Brokerage commission depends on the purchase or sale price of a single unit of security.
2. Volume of transaction: Another factor on which brokerage calculation largely depends is the volume of transaction. The larger the volume, the higher is the amount of brokerage.
3. Types of brokers: There are mainly two types of brokers in India –
- Full-service brokers
- Discount brokers
Full-service brokers provide various services connected with trading in securities such as imparting advice, researching, managing sales etc. So, their charges are always expensive.
Discount brokers offers a platform for trading and charges a small brokerage for that.
Benefits of a Brokerage Calculator
The benefits of online brokerage calculator are –
- The investors can use a brokerage calculator to compare between brokers demanding competitive brokerage commissions.
- Brokerage calculators gives accurate results in seconds.
- It accounts for all the price of trading.
- It is free and you can use it multiple times.