As a trader or investor it’s very important  to know about brokerage charges with taxes and some other charges, that you will have to pay to your broker. In this post i will tell you about how to calculate brokerage charges for all your trading orders.

Brokerage charges in early days

Before going further, if we go few years back, there was a time where you would have to pay a higher amount to take every trade as a brokerage charges.

Later around 2010 when Zerodha entered in Indian Stock market, then they have completely changed the game of broking industry. Zerodha came in Indian share market as a discount broker. Before it all the others were banks and some financial institutions who is called full service broker.

Full service broker vs Discount broker

fullservice broker is a licensed financial firm that provides a large variety of services to its clients, including research and advice, retirement planning, tax tips, and much more. ICICI Direct, HDFC Securities, Kotak Securities, Motilal Oswal etc are the example of full service broker. Here we get some variations in their brokerage charges, generally they charge 0.3% – 05% on each trade.

On the other side a Discount broker only provides a trading platform to their customer, they don’t provide any advisory service, they generally charge 20 to 15 rupees per trade. Whereas you have to pay 300- 500 rupees for each trade if your account is with a full service broker. That’s why in current days discount broker are getting very popular. Zerodha , 5 paisa, upstox, trade smart, samco etc are the name of some famous discount broker.

To open an account with Zerodha go to the link Open demat account.

We can say both types of brokers have their own advantages and disadvantage, so you can choose them according to your need. If you are sufficient enough to do research and analysis then you can go with discount broker.

How to calculate brokerage and some other charges

The broker charge to their customer because they provide them different types of services. As a trader when you will check your contract note there you will finds some other types of charges those have been deducted from your trading account like STT, some traders have confusion about it, all these charges goes to broker ? lets understand it with an image—

zerodha brokerage calculator
Zerodha brokerage calclator

Here we have taken the example of zerodha brokerage calculator.  You can find brokerage calculator almost on all broker site. To go to the link of zerodha brokerage calculator click here. In the above image you can check four section, but we will talk about first three section Intraday Equity, Delivery Equity and F&O Futures. We understand them one by one..

Intraday brokerage calculation

Here we have taken a share with name A  with current market price is 800 rs, so if you buy 100 shares of A and sell it at the price 810, your total brokerage for Intraday segment ( including taxes) would be 191.47 rupees.

In the above calculation Brokerage which is 40 rupees, would be go to your broker, remaining charges like STT, GST, Exchanges transaction charges, stamp duty etc will be go to central governemnt, state government, exchange etc. This is when you trade on intraday basis.

Delivery brokerage calculation

In next segement which is delivery , we have used the same script A with price 800 rupees, here if you will notice the brokerage is 0, because zerodha doesn’t charge any brokerage on delivery based trading, means when you hold your buying postion more than a day, but here you also notice the taxes  like STT  is very high so with same amount of stock and with same quanity you will have to pay the brokerage of 896 rupees.

Next section is Future and Options, here you can check the brokerage is lower than intraday, because in future trading the charges are lower, but its very risky, in taxes and brokerage the charges are lower, but if you goes wrong in trade then you can lose your maximum capital.

Now you can easily calculate how much you will have to pay each time when you place order, it would be helpful for you and you will stop yourself by overtrading.

One more thing i would like to mention that is available in list, there in bottom you will find a word “points to breakeven” for intraday its value is 0.50 and for delivery its value is 2.33, means for intraday, if your buying entry is at 800 and if you exit at 800.50 , there still you will not have to pay extra money from your pocket , means you will be in little bit profit, where as with delivery you will have to exit at least 2.33 points of gain, to overcome your brokerage. So this point is also very helpful.

Now you can easily calculate how much you will have to pay each time when you place order, it would be helpful for you and you will stop yourself by overtrading.

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