Money is the sole reason for the attraction of people towards such risky markets. As we all know money attracts money. So it is pretty obvious that people with some money would want to make more money. The stock market is tempting, luring, and a hell lot risky. Even after knowing the risks associated people invest. But the main agenda here is to know how do these people who make money do it? What goes on behind the curtain? Well to answer all such queries, a description of a situation is provided below with proper calculations.
Arjun bought 100 shares of TATA Steel that cost ₹300/share. So total cost price here equals ₹300×100= ₹30000. So Arjun made an investment worth ₹30000.
After some time Arjun no longer wishes to cling to TATA Steel. So he decides to sell his shares. At that time the cost per share was ₹400. So total selling here equals ₹400×100=₹40000. So Arjun sold shares for ₹40000.
Now from very elementary classes, we know that,
Profit= SP-CP
Profit= ₹40000-₹30000
Profit= ₹10000
So by the above calculation, it is evident that Arjun has booked a profit of ₹10000 just by buying and selling and virtually without meeting anyone too. Further from this₹10000 some amount of money is deducted in the form of brokerage fees. This fee is charged for the service of facilitation of trade. Many such online stockbroking platforms have brokerage calculators. This brokerage calculator as suggested by name estimates the amount that a customer has to pay if they purchase or sell any stock.
These brokerage calculators take into account several other factors some of which are listed and explained briefly below:
- Nature of activity: This means the kind of activity that is being pursued viz. buying of stocks or selling of stocks.
- Frequency: This means at what time interval the trader is going to swing the shares in the market. It can be months or intraday depending upon the choice of the user.
- Market listed in: Amount of brokerage also varies according to the market in which the stock is listed. Every country had one or more than one stock market. India has NSE and BSE.
- Specifics of shares: The number of share and amount per share makesup the total expense in buying a share. According to this amount, the brokerage is decided on the purchase.
- Extra charges: These charges are not imposed by the brokers. But are to be borne by the customer because this goes to the Government. Extra charges include charges like stamp duty, SEBI charges, GST, STT charges, etc. These too levy some extra amount on each transaction if it is regarding buying or selling.
Conclusion:
Stock markets are as tempting and lucrative as much as they are dangerous and risky in nature. Proper planning and strategy are the two factors that should be employed by investors before getting into the pool. Otherwise, it is a bloodbath out there. You can open a Demat account with 5paisa. They are the best broker in the market.
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