Charges & TaxesStt: - Exchange Transaction Charges : - GST - SEBI Chargess - Stamp Duty - Total -
When you trade in the stock markets in equities, futures or options, these are executed on a broker platform. When you put trades on the stock market, the broker will send you the contract note at the end of the day. The contract note shows you all the costs that you incur for executing the transaction. Out of these total costs, the brokerage is the small fee that the broker charges for this trade execution service. However, brokerage is only one of the costs billed in the contract note. It includes other statutory costs like GST, STT, stamp duty, transaction charges, SEBI turnover fees etc. However, only the brokerage goes to the broker. All other statutory charges,as mentioned above, are only collected by the broker on behalf of the various government bodies and deposited into their account.
On the website of the broker, one of the advantages you have is the use of a Brokerage calculator, which allows you to simulate the cost of a transaction. The Brokerage calculator or stock calculator, is a snapshot view of how much your trade would cost and this includes the brokerage cost as well as other statutory costs . This is a facility wherein you can evaluate the cost and even look at likely profit scenarios net of brokerage and all costs. The importance of the share calculator is that it shows you the net profit after all costs.
Brokerage Calculator: the Role That it Plays
Trading in the stock markets has a cost and this cost impacts your profit. It is best to be prepared before a trade and that is where the brokerage stock calculator comes in handy. Every trade has a cost. It could be an intraday trade, delivery trade, futures trade or options trade; they all have a cost although the size of the cost may differ. The brokerage share calculator gives you the comprehensive cost picture include brokerage cost and all the statutory charges combined. The brokerage calculatorcan be used for calculating the costs of an intraday trade, delivery trade, margin trade, futures trade, options trade etc.
How is the brokerage calculator useful in practice? You cannot enter into a trade without knowing how much cost it entails overall. Brokerage calculator tells you that. Secondly, you set your target price based on the target profit and it is always better to look at profits net of all possible costs. Lastly, the brokerage stock calculator also acts like a simulator in a scientific experiment. Before committing money you know profits under various scenarios.
Making Good and Smart use of Brokerage Calculator
Like in most simulation experiments, even in a brokerage calculator, your output will be as good as the quality of inputs you give. Here is what this means. To make the best and smartest use of brokerage share calculator, here are the steps to go through.
The first step is to select the asset class you want to trade. Here we refer to asset classes like equity intraday, equity delivery, futures, long options, short options etc. The second step in the case of cash market trades is to select whether the trade is intraday or delivery. This is important because brokerage and statutory charges are lower in intraday trade. Lastly, you must select the actual specific stock or futures contract or options contract/strike to trade. Once these 3 items are selected, the brokerage calculator gives you the output.
Merits of a Brokerage Calculator
Let us look at 5 important merits of a brokerage share calculator for a trader / investor.
- For traders and investors, the brokerage calculator provides the break-even level for the trade after considering all costs.
- Since you know the comprehensive cost of your trade, it is the brokerage stock calculator simulates likely profits / losses for different price scenarios.
- One of the important comparisons that a trader makes is intraday trade versus delivery trade versus futures trade versus options trade. Here the brokerage calculator is a useful input in making the decision that can be most profitable to you.
- There is something called the take to give ratio. That means out of every rupee you earn as net profit; how much is given away as cost. The lower this Take/Give ratio, the better it is for the trader. Brokerage calculator allows you to estimate that.
One of the major complexities in case of multi-step or multi dimension order is the cost involved. The brokerage can give you a single point information on the total cost of the strategy including the opening and closing of the strategy.
Can you explain what is brokerage?
Brokerage is the fee that the broker executing your trade on the exchange charges to you. Broker not only executes the trade on behalf of the client at the exchange platform, but also performs the clearing and settlement function and also assumes risk on behalf of the client at the stock exchange and the clearing corporation. Brokerage is compensation for that.
Who levies exchange transaction charges?
Stock exchanges also need revenues. For every trade, the exchange charges a transaction fee that is a small fee. These rates are defined by the NSE and the BSE separately. These exchange charges are collected by the broker from the client and deposited with the stock exchanges.
Who pays securities transaction tax and who collects them?
Securities transaction charges or STT was introduced in 2004 and it has stayed since. Different rates of STT are charged for different trading classes of assets like equity delivery, equity intraday, futures, options etc. STT is based on the value of the transaction. The broker collects the STT and pays into the government account.Normally, the STT is levied on the broker, who passes it on to the client.
What does it mean when brokers offer zero brokerage?
More than Zero brokerage it is low cost brokerage that is the right word. That is because the broker charges zero brokerage for some transactions but not for all transactions. Many of the low cost brokers offer free cash market delivery trades but they end up charging brokerage on intraday trades, futures trades and options trades. Even in zero brokerage trades, the STT will still apply as it is based on the trade value.
How is intraday brokerage lower than delivery brokerage
Intraday trade is when you initiate the trade and also close it on the same day. It could either be buy and then sell or it could also be sell and then buy. The brokerage charges and statutory charges are lower for an intraday trade as there is no delivery involved. Most brokers would charge you only on one side of the trade.