How are brokerage charges calculated by stockbrokers in India?
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- Updated On:07-Mar-2021
- Replies:2
Short Answer
Brokerage charges are not uniform and various stockbrokers in India charge difference percentage from your trading volume as their brokerage charge.
Detailed Answer
When you trade-in the stock market, it becomes crucial to know about the various charges involved. One of the main charges that you need to pay for trading in stock marketing is the brokerage charges. By knowing how stockbrokers calculate their brokerage charges you can select the appropriate stock broker for your trading needs. So here in this article, we are going to know how are brokerage charges calculated by stockbrokers in India.
What is a stockbroker?
Stockbrokers are the middleman or agents in the stock market. Through these stockbrokers, you trade in various stock markets. You need to choose a stockbroker to trade in various stocks, features, options, and derivatives. There are usually two types of stockbrokers available in the market and they are a full-service broker and discount broker.
A full-service broker offers all their brokerage services along with some extra services which are required for executing trade effectively. A discount broker, on the other hand, offers their brokerage service at a reduced cost than a full-service broker but they usually don't provide those extra services.
What is a brokerage charge?
A brokerage charge is a fee charged by the brokers to provide you with their services. Brokerage charges are not uniform and they vary from broker to broker. Brokerage charges also depend on the transaction type, and various slabs provided by a stockbroker.
How Brokerage charges are calculated?
Brokerage charges are usually calculated differently by various stockbrokers. An intraday trading brokerage charge can range from 0.01 to 0.05 percent of the total volume or amount transacted. You can usually calculate this charge by multiplying the market price of the share purchased with the number of shares and again multiplying it by the agreed percentage of the stockbroker of intraday trading.
Brokerage = No. of Shares Bought/Sold x Price of 1 unit of stock x Brokerage %
When you decide to hold your stocks, stockbrokers charge you delivery brokerage fees, and fees can vary from 0.2 to 0.75 percent. You can usually calculate this charge by multiplying the delivery charge with the number of shares and the market price.
There are discount brokers who levy a flat fee irrespective of the volume of trade.
Conclusion
Now, you have a brief idea of how are brokerage charges are calculated by stockbrokers in India. Usually, the brokerage charges are calculated by stockbrokers as a small percentage of your trading volume, which varies among stockbrokers.
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Discussion (1)
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Harshil Patel
The brokerage depends on the type of trade and the volume fo trade. While some might charge a higher brokerage fee, other have a reasonable brokerage fee.