BAJAJ BROKING

Notification
No new Notification messages
Inventurus Knowledge Solutions IPO is Open!
Apply for the Inventurus Knowledge Solutions IPO through UPI in just minutes.
Open a Free Demat Account
Pay ZERO maintenance charges for the first year, get free stock picks daily, and more.
Trade Now, Pay Later with up to 4x
Never miss a good trading opportunity due to low funds with our MTF feature.
Track Market Movers Instantly
Stay updated with real-time data. Get insights at your fingertips.

How to Calculate Brokerage in Share Market

Listen to our Podcast: Grow your wealth and keep it secure.

0:00 / 0:00

If you have traded or invested in the share market, you might be familiar with the brokerage levied on your transactions. Buying or selling securities, whether for trading or investment purpose, attracts different charges like brokerage, SEBI charges, GST, etc. Traders or investors are profitable in their endeavor if the profit generated surpasses the cost of all such additional fees and charges.

Recently, there has been a rise in the number of stockbrokers, of both foreign and domestic origin, operating in the Indian market. This has led to brokerage firms overhauling their business models. As a result, several stockbrokers are now charging a flat brokerage fee to reduce the cost of trading for users.

In this article, we will analyze what a stockbroker is and its different types. We will understand brokerage charges levied by the brokerage firms and the things to be mindful of in these charges.

What is a stockbroker and its types?

A stockbroker is an intermediary that facilitates transactions in the financial market. These firms, combined with the stock exchanges, depositories, clearing houses, etc., are necessary for the smooth functioning of the financial market. These firms charge brokerage for the services they provide. Depending upon the type of services they provide, stockbrokers can be classified into:

  • Full-Service Brokers in addition to acting as an intermediary in the financial market, also provide other services like investment advisory, investment research, etc. A dedicated relationship manager is assigned by the stockbroker for each user. The fees charged, as a result, is higher than the discount brokerage firms.
  • Discount Brokers provide the basic platform to facilitate buy and sell transactions in the stock market. Since these firms do not offer comprehensive research, advisory and dedicated Relationships Managers, the brokerage fee is considerably lower than that of a full-service broker.

You need a Demat and Trading Account to access the share market online. You can consider discount brokers to save on brokerage costs. Bajaj Broking is one of the leading names in the discount broking space which offers low brokerage trading.

What are Stock Market Brokerage Charges?

Brokers charge brokerage when you buy or sell shares on their platform. A brokerage charge is necessary for the stockbrokers to fund their operations.

The brokerage charged depends on the type of broker: full-service or discount broker. A full-service broker provides additional services than a discount broker and therefore charges a higher brokerage charge. While a discount broker offers only the platform to trade or invest in and no additional services like personalized investment advisory; hence charges a lower brokerage.

However, the maximum brokerage that can be charged by a broker has been specified in the Stock Exchange Regulations which should not exceed 2.5% of the total value of the transaction done by the client, hence, a broker cannot charge more than 2.5% brokerage from his clients

 

Additional Read: brokerage calculator

How to Calculate Brokerage Charges in Share Market?

Before carrying out a transaction of buying or selling shares, users must understand the brokerage charges, which can easily be calculated using a brokerage calculator. Doing so will help them understand their potential profits or losses while carrying out a transaction. This is particularly true for intraday traders with a low-profit margin.

To calculate brokerage charges, investors must understand the different methods brokerage firms have adopted to compute the applicable brokerage charges on a transaction. These different methods are:

  • Brokerage charge as a percentage of trading volume,
  • Flat brokerage charge per transaction, and
  • Subscription-based model.

Brokerage Charge as a Percentage of Trading Volume

Brokerage firms following this method charges a fixed percentage on the trading volume as a brokerage charge. For instance, let us assume that you are selling 500 shares of X Company at Rs. 620 per share. Here, the total transaction is worth Rs. 3,10,000. Suppose your broker charges a brokerage fee of 0.05% on your trading value. In that case, the brokerage charge will be Rs. 155. In such a transaction charge model, the brokerage charges increase as the trading volume increases.

Flat brokerage charge per transaction

Brokerage firms following this model charges a flat fee of a specified amount on each transaction regardless of the trading volume. For instance, if a broker charges a brokerage fee of Rs. 20 per transaction, then a single order placed with a transaction value worth Rs. 10,00,000 would entail a brokerage fee of Rs. 20. Similarly, an order placed with a transaction value worth Rs. 50,000 will translate to a brokerage charge of Rs. 20 only.

Conclusion

The buying/selling price of a security and the associated volume significantly impact the brokerage charges depending upon the brokerage fee model each broker has. While full-service brokerage firms generally charge a percent-based brokerage, discount brokers charge a flat fee on each order.

In addition to the various services offered, investors and traders must consider the varied brokerage fee model adopted by different brokerage firms while deciding on their brokers. This decision will significantly influence each transaction's overall net profit/losses.

Share this article: 

Frequently Asked Questions

What is brokerage in the share market?

Answer Field

Brokerage in the share market is a fee for trading services. Knowing how to calculate brokerage is essential for understanding trading costs. Brokerages vary depending on broker type and transaction volume.

How is brokerage calculated for different types of trades (delivery vs. intraday)?

Answer Field

How to calculate brokerage varies based on the type of trade. Delivery trades generally involve percentage-based brokerage, while intraday trades may apply either a flat rate or percentage fee, depending on the broker’s model, impacting total trading costs.

What factors influence brokerage rates charged by brokers?

Answer Field

Learning how to calculate brokerage involves understanding factors like broker type, trading volume, transaction type, and any extra services such as advisory. Regulatory limits also cap brokerage percentages, impacting the maximum rate a broker can charge.

Are there different brokerage models (fixed vs. percentage-based) I should know about?

Answer Field

Understanding how to calculate brokerage includes knowing various brokerage models. Fixed models charge per trade, while percentage-based models scale with trade value. Some brokers also offer subscription-based models that maintain consistent charges regardless of trade frequency.

How can I calculate my total trading costs including brokerage fees?

Answer Field

To know how to calculate brokerage and total costs, add brokerage fees to other charges like SEBI fees, GST, and transaction fees. A brokerage calculator helps estimate total trade costs.

What are hidden fees I should watch out for when calculating brokerage?

Answer Field

When considering how to calculate brokerage, watch for hidden fees such as SEBI charges, GST, transaction charges, and demat fees. Always review broker terms to identify all fees beyond basic brokerage.

Can I negotiate brokerage fees with my broker, and how?

Answer Field

Negotiating brokerage fees can be possible if you know how to calculate brokerage effectively. High-volume traders may discuss custom rates with brokers based on their trading volume, potentially securing lower fees or discounts on standard charges.

No Result Found

investment-card-icon

Advanced Charting Tools for Smarter Trading | Bajaj Broking

Trading charts visualise vast amounts of market data, making it easier for users to identify patterns and track trends. Learn all about advanced charting tools as offered by Bajaj Broking in partnership with TradingView.

investment-card-icon

What is Trade & Carry?

A trader can enhance his/her potential in the stock market with the facility of carry and trade. Learn, what is carry and trade, how to use it and what are the benefits of it.

investment-card-icon

Share Market Timings in India

Dive into the intricacies of Indian stock market hours, including pre-opening, normal trading & post-closing sessions, along with insights into forex trading timings.

investment-card-icon

Share Market Timings | BSE & NSE, Opening & Closing | Bajaj Broking

Discover the Indian share market's schedule with our comprehensive guide on share market timings, helping investors align with trading hours for ideal strategies.

investment-card-icon

Stock Market Trading Holidays

Stock Market Holiday Calendar for 2024 - Align your successful trading strategy accordingly and be a master of investment now with Bajaj Broking.

investment-card-icon

Dividend Yield Calculator

Dividend Yield Calculator: Learn how to calculate and interpret dividend yield to make informed investment decisions and maximize your returns.

investment-card-icon

What are Penny Stocks

Penny Stock Investing: Learn how to get started in three simple steps & explore the potential rewards of navigating this volatile yet rewarding market.

investment-card-icon

Difference Between Cash Flow And Fund Flow

Explore in-depth insights on Difference Between Cash Flow And Fund Flow in our Knowledge Centre. Stay informed with expert analysis, tips, and guidance.

investment-card-icon

Diversification in Investing

Learn the art of diversification in investing: mitigate risk, optimize returns & build a resilient portfolio. Get insights into effective diversification strategies!

investment-card-icon

What are Equity Shares

Discover equity shares, their features, types, and benefits. Learn how to buy equity shares, understand dividends, and explore equity market prediction methods.

Our Secure Trading Platforms

Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading

Bajaj Broking App Download

8 Lacs+ Users

icon-with-text

4.4+ App Rating

icon-with-text

4 Languages

icon-with-text

₹4700+ Cr MTF Book

icon-with-text