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Concept of brokerage percentage

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Forum: Stocks (Equities)
Posted By: Hardik U
Posted On: 10/31/2011 1:31:56 PM
Reply Count: 2
Last Update: 12/19/2013 5:12:28 AM
Last Replier: Vikram
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Hardik U
Anonymous User

Posted on 10/31/2011 1:31:56 PM

Concept of brokerage percentage
Hi,

I am new to trading and I found your site very user friendly. I have few queries regarding stock queries.

It will be nice if you can add one article to make us understand the concept of brokerage percentage.

Eg. I will take X company providing 0.50% brokerage on delivery.
Question: Is the percentage is on every share I purchase or on the total amount of share purchase.
I take 100 shares of a company at Rs 100/Share - What will be my brokerage? Will it be on 100 shares or will it be on price of each share?

So is it good to take more number of shares to reduce brokerage or is it nice to get a costlier share?

Request you to mail me at the earliest if possible.

Thanks in advance
Hardik
Vikram
Anonymous User

Posted on 10/31/2011 1:34:33 PM

Re: Concept of brokerage percentage
Dear Hardik,

Brokerage is calculated on your total purchase or sells cost in rupees.
i.e. If you purchase share of total Rs 10,000 (irrespective to quantity or company) at brokerage rate of 0.5%, you will have to Rs 10,000 * 0.5 / 100 = Rs 50 for one side trade (either buy or sell)

Letís take couple of example:

Transaction 1

Company: A
Transaction: Purchase
Shares: 1000
Share Price: Rs 10 per share
Brokerage: 0.5%
Brokerage = (10*1000) * (0.5/100) = Rs 50


Transaction 2

Company: A
Transaction: Sell
Shares: 1000
Share Price: Rs 15 per share
Brokerage: 0.5%
Brokerage = (15*1000) * (0.5/100) = Rs 75

Note: Most companies have a minimum brokerage, which they change in case the brokerage calculated using above calculation is less than that. For example ICICI Direct charges Rs 25 minimum brokerage. In above transaction if you will buy only 100 share or sell only 100 shares, you will have to pay Rs 25.

Hope this will help.
 
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