When you choose to trade in the stock market, you need to be aware of the different types of charges involved. One of these charges happens to be the brokerage charge that your DP charges from you. A DP can be either a financial institution or a stockbroking company with whom you hold a Demat account.
The brokerage fee here is the funds the DP receives for helping you carry out a trade. Usually, DPs charge a percentage of the total trade value as the brokerage fee. This fee is levied over and above the original trade value and gets deducted from a trader’s portfolio. Since the brokerage fee is usually dependent on the trade value, a large trade value comes with a significant brokerage charge. This is where the brokerage calculator comes to the fore as it helps investors figure out how profitable a trade would be when the brokerage charges are involved.
Brokerage Calculator: A Guide
The brokerage calculator is an online tool that helps investors and investors to calculate the brokerage fee. The calculator covers both the aspects of buying and selling on the stock market By transaction, it includes both buying as well as selling. The calculator covers most types of charges like Commodity Transaction Tax or CTT, Goods and Services Taxes or GST, Securities Transaction Tax or STT, the SEBI charges, Stamp Duty and Transaction charges as well. Let it be known that all these charges are in addition to the brokerage charges.
Types of Brokerage Calculators
Different types of brokerage calculators help you determine the brokerage charges that come with different types of equities. This includes calculators or calculating brokerage fees of Equity, F&O, Commodity and Currency brokerage fees. Let us have a look at them in more detail::
Equity
The equity brokerage calculator is used to calculate the brokerage charges for equity intraday and delivery equity.
Equity intraday involves the buying and selling of stocks on the same day.
In delivery equity trading, trades aren’t closed on the same day.
The brokerage charges for both these methods are different with intraday being cheaper than delivery.
F&O
Similar to the equity brokerage calculator, this calculator calculates the brokerage for F&O or Futures and Options transactions in the market.
Futures and Options come under derivative products in the stock market.
In F&O, buyers and sellers agree to buy/sell the derivatives on a fixed date at fixed price.
Currency
As the name points out, the currency brokerage calculator calculates the transactions carried out in the currency market
Also called the foreign exchange market, the currency market is where the different currencies from different countries are bought and sold.
There are many participants in the currency market like traders, banks or financial institutions, corporations, etc.
Commodity
This brokerage calculator allows traders to calculate the fees involved in carrying out trades in the commodities market.
When commodities are transacted in the market, the CTT is also charged by both the seller and the buyer.
Additional Read: Brokerage Calculator Comparison
Best Brokerage Calculator Must-haves
A brokerage calculator needs to have certain properties that will make it accurate and help the user operate it easily. Some of these properties are listed below:
Brokerage calculators must have a user-friendly interface.
Brokerage charges need to be updated on the calculator regularly.
The variables that are being asked of the trader should be customizable to make it convenient for the user to use.
Brokerage calculators need to be accessible from every device that a user wishes to access them from like a mobile phone or tablet.
The provision of using a brokerage calculator should be free and should not come with any additional charges.
Charges Showed on Brokerage Calculators
Listed below are some of the charges that are shown on the brokerage calculator. n
CTT/STT charges
The STT or Securities Transaction Tax is charged by the government when you carry out transactions of securities like Futures & Options, Equity and Mutual Funds in the stock market.
The CTT or Commodity Transaction Tax is charged on transactions that are made in the domestic commodity exchanges
Certain exceptions come with CTT when they are carried out in foreign currencies.
SEBI Charges
Stamp Duty
When traders participate in the currency or commodity markets in India, they need to pay stamp duty for trading
This stamp duty charge is imposed on them per the Indian Stamp Act of 1899.
Traders need to know that the stamp duty charge may differ from one state to another.
DP charges
This charge is levied by the DP or Depository Participant, i.e. your broker.
DP charges are to be paid for each transaction, regardless of the shares sold.
Conclusion
There are many benefits of a brokerage calculator when used in the right manner. The best brokerage calculator available in the market will help a trader tremendously to gauge all the charges involved in a transaction and how profitable it might be in the long run. This is why it is important to know how a brokerage calculator works and all the benefits it can provide you to help make the most of it.
Additional Read: How to Effectively Use a Brokerage Charges Calculator
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.
This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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