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How to Calculate Profit, Loss and Brokerage Fees in Stock Market Trading?

12th April, 2010

in Stock Market Guides

buy sell

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.

{ 14 comments… read them below or add one }

limseisei May 20, 2011 at 9:09 pm

hi.
may i ask what is intraday?
thanks.

regards,
lim

Reply

1-million-dollar-blog May 20, 2011 at 9:30 pm

limseisei,

Intraday means that you buy & sell the same stock on the same day.

Reply

AlanMDC June 17, 2011 at 9:12 pm

is your sell settlement calculation correct? should it also subtract the clearing fees (0.03%) and the stamp duty?

Reply

1-million-dollar-blog June 17, 2011 at 10:35 pm

AlanMDC,

You are right, it was typo error. Anyway it is corrected now.

Reply

A.Narasingrao October 14, 2011 at 9:19 pm

I bought 1 share of TCS at 1033 on 3-10-2011 and later on 10-10-2011 I sold it for 1070 What is the net gain ?

Reply

Bursana March 14, 2012 at 11:37 am

Hi,
Thanks for this excellence info. How can we calculate the profit in percentage term? Profit margin?

thanks.

Reply

mansor October 22, 2012 at 6:32 pm

“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?”

Meaning if sell the share in T+2, i only have to pay the loss… am i right

Reply

1-million-dollar-blog October 23, 2012 at 5:51 pm

mansor, you only have to settle the different between the selling & buying price. Means that you will have either contra gain or loss.

Reply

SaviourV November 27, 2012 at 3:23 pm

Just how is the calculation of stamp duty done? Working on a formula for use in Excel right now.

I mean, if your total share cost, before adding in extra charges, is RM 1,560, do you get RM 1 or RM 2 worth of stamp duty?

I’d appreciate your answer on this, even though it might be a silly question. ^_^;;

Reply

1-million-dollar-blog November 27, 2012 at 3:28 pm

SaviourV, you will be charged RM2.

Reply

SaviourV November 27, 2012 at 4:41 pm

So, let me get this straight: less than RM 1.5K, RM 1.00 stamp duty; more than that, RM 2.00 stamp duty?

That would mean that the stamp duty’s rounded UP to the next value. 2 decimal places, I guess. Correct me if I’m wrong.

Reply

1-million-dollar-blog November 28, 2012 at 12:02 am

>RM0 to RM1000, stamp duty is RM1
>RM1000 to RM2000 stamp duty is RM2
>RM2000 to RM3000 stamp duty is RM3
and so on

Reply

Marshall March 16, 2013 at 9:34 am

Hi sir,

I have a question in part 3, If I make profit from contra grain transaction within T-3 days, is the profit be debited to my trust account within the same day of transaction date or when? please advise thanks.

regards,
marshall

Reply

1-million-dollar-blog March 16, 2013 at 10:15 am

Hi, the profit will be credited to your account on the day after T+3

Reply

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