This is the Part 4 on the series. In this part, I will explain on how to calculate profit (or loss) and applicable fees when buying or selling shares at Bursa Malaysia.
By the end of this part, you will have the basic knowledge to enter stock market.
But the most important thing to remember is that, make sure that you are investing, not gambling in stock market.
Part 1 – How to Open Trading and CDS Account for Trading in Bursa Malaysia?
Part 2 – How to Buy and Sell Shares in Bursa Malaysia?
Part 3 – How to Determine Trading Settlement in Bursa Malaysia?
Part 4 – How to Calculate Profit, Loss and Brokerage Fees in Stock Market Trading?
In Part 3, we see that the settlement formula as follow.
Total Buy Settlement (RM) = Value of Shares + Brokerage Fees + Clearing Fees + Stamp Duty
Total Sell Settlement (RM) = Value of Shares – Brokerage Fees – Clearing Fees – Stamp Duty
Now I will show you on how calculate all the component in the formula.
Step 1 – Calculate the value of Shares
This is easy. For example if you buy or sell 1,000 units of A shares at RM5.00 then you have to pay or received RM5,000.
Step 2 – Calculate Brokerage Fees
Brokerage fees is really depends on your chosen Broker. Normally it range from 0.05% to 0.7% from contract value depending on your value of transaction, account type and trading type. However, broker normally impose minimum brokerage fees per transaction. You can check for online brokerage fees in this comparison table.
Take the same example as above, and with brokerage fees of 0.42%.
Brokerage Fees = 0.42% x RM5,000 = RM21
Step 3 – Calculate Clearing Fees
Clearing Fee is charged by Bursa as the clearing house. The fee is 0.03% from contract value or value of shares but subjected to maximum of RM1,000.00
Take the same example as above.
Clearing Fees = 0.03% x RM5,000 = RM1.50
Step 4 – Calculate Stamp Duty
Stamp duty is a charge by the Government and Broker will collect on their behalf. You have to pay RM1.00 for every RM1,000.00 of contract value or value of shares and rounded up to the nearest ringgit subject to maximum value of RM200.00
Take the same example as above.
Clearing Fees = RM5
Step 5 – Calculate Profit (or Loss)
Base on formula above we take the following example,
Buy 1,000 units of A shares at RM5.00 and sell it later at RM6.00
Shares Value when buying = RM5 x 1,000 = RM5,000
Shares Value when selling = RM6 x 1,000 = RM6,000
Buy Settlement = RM5,000 + 0.42% x RM5,000 + 0.03% x RM5,000 + RM5 = RM5,027.50
Sell Settlement = RM6,000 – 0.42% x RM6,000 – 0.03% x RM6,000 – RM6 = RM5,967.00
Net Profit = RM5,967.00 – RM5,027.50 = RM939.50
Step 6 – What is Contra?
In Part 3, we already understand that when you buy shares, you only have to pay it at T+3. What happen if you sell the shares that you bought earlier before T+3 or you pay for it?
We call this Contra. What will happen is that, your broker will calculate the different between buy and sell settlement. The different sum will be credited or debited in your trust account depending whether you are making profit or loss.
If you make profit from contra transaction, we call it Contra Gain. If otherwise we call it Contra Loss.