How to calculate brokerage on your own?
Those who know the market trends can go for trading in different options such as derivatives and cash. The derivatives is a contract based option where the trader has to offer some margin money and go for a contract which can be for one, two or three months. The cash is the segment where one can find options such as intraday and delivery trading. Both of these options have different features, and one can go for any of them as per his profile as well as risk-bearing capacity and willingness to earn more and regular profit.
The cash segment:
Intraday trading is a popular option in the cash segment. In this option, one needs to clear the position in the same trading session. It means if one has bought some shares in the opening hours of the market, he has to sell them before the closing of the market on the same day or vice versa. If one carries forward the trade, it converts to delivery based trade where one may have to bear more brokerage amount and also settle the account in a couple of days. The delivery based option is where one can buy the shares from the market and carry it forward. He can make full payment for the same to the broker and park the shares in his demat account. The brokerage in intraday is much lower than that in the delivery based transaction.
What is brokerage?
The traders need to buy and sell shares from the market, and this platform is provided by a broker who may be affiliated to a broking firm or company. He charges some amount for every transaction done by the concerned trader on his platform, which is known as the brokerage. One needs to know the brokerage rate and get a brokerage calculator if he trades in bulk.
How is the brokerage calculated?
In the market, one can find different ways of how the brokerage is calculated. As there is no specific way set by the authorities, every broking firm has the liberty to count the brokerage as per its convenience. Some of the brokers count it on the total volume of the transaction as a fixed rate of brokerage while some go as a fixed amount. In some of the firms, one can also see the brokerage as advanced payment from the client. The rate of brokerage differs for the cash as well as derivatives. In cash also, the intraday trade attracts a different rate of brokerage while the delivery based trades have different.
The trader needs to ascertain the calculation of the brokerage as well as a type before starting the trades with the concerned broker as later it can be a matter of dispute between the trader and broker. In online traded the brokerage is lower than that of the offline trades where the broker offers support of a terminal operator. The rate of brokerage for retail and bulk traders also differs, and hence, one needs to be much sure about this calculation in early stage only.