‘Price is only ever an issue in the absence of value!’
But not so in the highly competitive Stock Broking business, where the Investor calls the shots in what he is willing to pay for the service he enjoys…. And he is able to fish around the deep pool of thick competition, for the lowest price AND still expect optimum service value!
Stock Trading, through a digital platform online (eg. mobile app) or Trading via offline mode, both involve participation of a broker who extends a service, which carries a brokerage cost to the investor. The broker is the essential cog in the wheel, between the trader and the DP, keeping the trades ticking!
Investment in stocks imply that the investor hopes to make a profit either in the short or longer time-frame. This profit will always be blunted by his brokerage cost.
However, brokerage is not the only cost that is incident on share trading. A host of other statutory charges are levied on every trade that is executed. These can be summed up as follows:
|Charge levied||Levied by||Rate||Trade levied on|
|Security Transaction Tax (STT)||Govt. of India||0.1% of transaction amountIntraday 0.025%|
Eq. Futures 0.01%Eq. Options 0.05%(On premium)
|a) Delivery trading:Buy and Sell sidesb) Intraday:Sell side onlyc) Eq. Futures: Selld) Eq. Options: Sell|
|Stamp Duty||Respective States||Range 0.0001% to 0.015%, depending upon security type||Buy side only|
|Transaction Charges||Stock Exchange||BSE:0.003% on turnoverNSE:0.00325% on turnover||Buy & Sell sides|
|SEBI Turnover Fee||SEBI||Rs. 10/- per crore of turnover||Buy & Sell sides|
|DP Charges||CDSL/NSDL(Depository)||Fee levied by Depository on DP, who passes it on to investor||Sell side|
|GST||Govt. of India & State Govt.||18% of Brokerage and Transaction charges||Buy & Sell sides|
Brokerage Calculators are online arithmetical tools which help investor assess the total cost of trade inclusive of all the above charges, at a glance, when key details of his trade are input into it.
The utility of Option Brokerage Calculator or Equity Brokerage Calculators, lies in their quickness of calculation, updated rate application etc, helping investor assess his net profit or the total cost incident on his portfolio, at significant trading points.
Let’s understand what the Brokerage Calculator stands for and how it makes life easier for the investor.
- The Brokerage Calculator equips every trader in the market with an insight to compare the service cost across a range of offerings available from the broking community and across exchanges as well. The key merit of using a Brokerage calculator is its Savings potential in trading, as there are no further hidden costs, beyond what the tool reveals and the tool by itself is offered free of cost. The choice of a broker made by the investor based on such as tool, ensures that he has made a conscious decision relating to the best service provider he can find in the market.
- In volatile markets the need of the hour is quick and accurate decisions. The use of a Brokerage Calculator ensures that reliable numbers are available on the trading platform itself, ready to reference from and apply to the day’s trading strategy
- This tool serves as a Reality check to the trader as it prices in the ‘all in cost’ for every buy or sell that he proposes to carry out. Since this can be done prior to the trade itself, or even at various market price levels, he gains the advantage of avoiding any misconceptions he may be laboring under, relating to his trade success. Hence, he is able to book accurate profits.
- Due to his capacity to carry out ‘Full Cost pricing’, the trader is able to arrive at a Break-Even point in every trade, with a high degree of precision. This helps him identify target levels for market orders, limit orders and stop-losses accurately. In the long run, right timing leads to right investment decisions, due to the use of this methodical tool.
- The knowledge that he has made a Head Start in getting the calculations right, boosts the confidence of the investor. This would give the right amount of steadiness and comfiture to trade as blueprinted by his technical indicators, without worries relating to under or over valuations.
The types of share brokers offering Brokerage Calculators range from Traditional brokers, Discount brokers, Banks with broking arm – in fact, almost all leading brokerage firms in the market. The competition amongst them, have brought down the trade cost, for the investor. With Average Daily Turnovers on account of retail investors trending upwards in a phenomenal manner, brokers have come out with low, flat fee structures to capture new clientele/retain existing clients. Also, fee structures are no longer ‘one size fits all’, but customized to cater to holistic service needs encompassing, margin funding, wealth and portfolio management as well as any other funding requirements. This can only be a welcome move for the retail investor, as it helps him take firm and sure footsteps into equities, as a viable investment option.