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Friday, June 21, 2024

3 Methods to calculate Brokerage in the Share Market

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Brokerage in the Share Market is the charge levied by your broker to place a buy or sell order, and for other services provided. In India, there are mainly 3 methods to calculate brokerage in the share market:

Per Volume: % Brokerage that is based on volume traded

Per Trade: Brokerage for every single trade

Per Month: Monthly Brokerage plan that usually has no limit on volume or number of trades.

The NSE brokerage calculator is a brokerage calculator for trading in various segments of NSE. It is a handy tool to calculate the actual brokerage cost you incur for a broker. Many brokers have a separate NSE brokerage calculator page in their website, that automatically calculates the brokerage and other fees based on your input values of Price, Quantity and Type of trade (buy or sell). Make sure you go through the brokerage calculator web page in the website of different brokers to quickly compare the brokerage fees and then decide upon the broker.

At Enrich, we have a full-fledged NSE brokerage calculator for Equities and Commodities. Apart from brokerage, we also provide details of all other fees that is levied for a trade by NSE. These are:

  • Transaction Charges
  • Clearing Charges
  • GST
  • STT (Security Transaction Tax)
  • Stamp Duty Fee
  • SEBI Charges

The total cost you incur is a sum of the brokerage and other charges (Transaction charges, Clearing charges, GST, Security Transaction Tax, Stamp Duty Fee and SEBI charges)

Which method of brokerage calculation do you choose?

In order to decide which method of brokerage calculation works out cheaper for you, you have to understand your needs first.

Case 1: Heavy Volumes of trade

If you are very active in share trading and invest heavily in high volumes of trade then it is better you go for per volume brokerage with a broker who offers you a lower percentage for high volumes.

Do note, the brokerage is flexible and priced such that brokers can get more commission based on total amount invested. Since there are many brokers in the market, they often give you an incentive of lower brokerage if you trade above a certain volume. Understand the various slabs of brokerage in per volume method and then select your broker.

Case 2: Low Volume and Medium to High number of trades

If you buy or sell several types of shares and are very active in day trading then, you might prefer per month method of brokerage. If you and your broker agree for a monthly flat charge of brokerage with unlimited trades of buy or sell for a month, you will reduce the brokerage that works out per trade.

This way, you can reduce the brokerage fees and not pay for every trade you make.

Case 3: Very Low number of trades

If you are into share trading like a part time hobby only or investing for very long term, then you will normally not have many trades per month. In this case, it is best if you go for a per trade brokerage plan with your broker. The broker will charge you a higher fee ‘per trade’ compared other two methods but since you make very few trades in a month, the actual money you spend on brokerage will be much less.

Apart from the brokerage, also lookout for the AMC or the Annual Maintenance Charges. Discuss with the broker how the AMC will be charged – per month deduction or one time every year. This also adds up to your total cost of having a broker. If you trade heavily every month, then it is better you pay the AMC at one go upfront, so that the actual brokerage fee you are charged in a month is clear.

Ultimately, it is the flexibility and clarity in brokerage plans offered by a broker that should help you choose the broker. Please contact our experts if you want more details on the brokerage plans we offer at Enrich.


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