Are you a trading veteran who can smoothly sail on the volatile waves, or are you the one who has started to dip their toes in the volatile water of the stock market? Either way, you must learn the technical tips and tricks to leverage the latest technology integrated into your trading app. Be it the tools for fundamental and technical analysis, stock screeners or calculators, margin calculators, or other such tech tools available on these virtual trading platforms, one must master the art of optimizing them to generate maximum returns on investment.
The latest addition to the toolkit is the brokerage calculator. This tool provides a complete overview of brokerage charges associated with a particular trade before even performing the trade. It helps traders and investors calculate the brokerage charges, taxes, and other additional transaction charges related to buying and selling any financial instrument. They are easy to use and are also available for free online. There are certain factors that these brokerage calculators take into account before they provide the overall estimate related to a particular trade.
To name them,
- Type and segment in which one is trading
- Buy and sell prices
- Quantity of shares traded
- The platform that will be used for trading.
Once you furnish all these details, you will receive the brokerage fees and additional charges like turnover, GST, STT, stamp duty, etc. It is an effective way to plan your trades in alignment with the availability of funds and risk tolerance appetite. The level of transparency brokerage calculators provide regarding associated costs can save many investors from draining out their funds for engaging in multiple trades.
Let’s have a look at the list of benefits that the brokerage calculator provides:
- As mentioned above, it helps traders make informed decisions because they know the costs incurred behind a particular trade on their trading account.
- It enables you to calculate the break-even point, which means that for any trade, the break-even target is the sum of the asset price and its associated costs. The calculator finds these additional costs for the traders so that they already know the buying price to target the break-even point.
- It is an ideal comparative tool that compares the brokerage fees offered by other financial portals. In this way, choosing the best price that suits us becomes easy.
- Quick and accurate are two essential benefits of these tools as they can perform complex calculations in a matter of seconds, thus allowing you to make the most of your trading session as the entire process is automated. Doubting the result will be a naive thing on our part.
Understanding other parameters that alter the brokerage calculation are as follows:
- STT charge: securities transaction tax applies to all trades in the equity segment and is levied to both buy and sell trades. For intraday trades, it applies to only sell trades.
- CTT: stands for commodity transaction tax, levied on all trades in this segment except agriculture.
- SEBI charge: also known as a turnover charge, applies to all buy and sell trades.
- Stamp duty charges: levied by state governments, these charges are applicable on intraday, delivery, and derivatives trades, and it is set only on buy trades.
A brokerage calculator is something that many trading firms flex on their web and mobile applications for free. If used wisely, it can always save traders and investors from falling into the pitfalls of unnerving financial constraints.
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