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Intraday Brokerage Calculator and It’s Importance

Intraday Brokerage Calculator and It’s Importance

When you are buying shares for delivery in the long term, your brokerage rates may not matter. If you are playing for a 60% return on the stock over 2 years, then it does not matter whether the delivery brokerage is 40 basis points or 50 basis points. In the final analysis, the difference may be marginal. But when you are churning the capital quickly intraday and working on very thin spreads, then the brokerage rate will matter a lot. As an intraday trader, you need to keep your brokerage at a very low level to be profitable on a consistent basis.

What You Need to Know About Intraday Brokerage Calculator

  • Brokerage rates on intraday equity trading are normally much lower than delivery brokerage. For example, if the normal brokerage on delivery trades are around 40-50 basis points then the intraday brokerage will be around 4-5 basis points. This will give the trader enough leeway to churn the capital frequently.
  • When you place the intraday trade in the trading system, you must define the trade as an intraday trade. Only then you get the benefit of this concessional brokerage. You can also choose to place a cover order or a bracket order which will give you more leverage. Basically, you can take bigger positions for the same margin.
  • When it comes to futures, you have to the facility to trade intraday or to carry forward your positions. Intraday brokerage on futures is normally lower than the normal futures brokerage. Here you need to remember that brokerage on futures is imposed on the notional value of the transaction which is the lot size multiplied by the price.
  • When you trade intraday, brokerage is not your only cost. There are other costs like STT, GST, stamp duty, turnover tax etc. When you add up all these costs you get the total cost of your intraday trade. You must first put down this total cost and then simulate your break-even price of the intraday trade. Lower the cost, lower your break-even level.
  • Intraday brokerage charges are much lower but they are only applicable in case you close the trade intraday. In case you choose to convert the intraday trade into a delivery trade then the normal delivery brokerage will apply in your case. You can use the brokerage calculator on the broking website of Tradebulls to get a clear picture of trading break-even.

3 Things to Remember About Your Brokerage Calculator

Brokerage costs are the key to your trading performance as the onus is on you to create a trade with breakeven levels that are as close as possible.

  • Negotiating your brokerage rate is important for intraday trading as it determines the level at which you break even and also the extent of other charges. For example, charges like GST are imposed at 18% of the brokerage change. So higher the brokerage that you pay, higher will be the GST payable on the transaction.
  • The other expenses apart from brokerage will add up to almost as much as the brokerage so take a holistic picture of your costs. Try to simulate your breakeven level under various levels of price volatility and illiquidity to know your actual costs of intraday trading.
  • Intraday trading is essentially a trade-off between profit potential and cost management. You need to maximize the churn of your capital to get the most profits out of intraday trading. However, higher churn also entails a higher cost in the form of brokerage and other charges. It is this trade-off that will determine your eventual profitability in intraday trading.
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