I usually day trade in currency futures and the various charges are as follows:
Say, I bought and sold 1400 USDINR futures in a day. At average price of 62.265, this means a turnover of 1400 * 62.265 * 1000 (lot size) * 2 (bought and sold) = Rs. 174342000. On this, the charges applied are approximately:
Turnover charges: Rs 2350 (0.00135% of turnover)
Stamp charges: Rs 1743.42 (0.001% of turnover)
SEBI charges: Rs. 348.68 (0.0002% of turnover)
Service Tax: Rs. 325
Brokerage: Rs 280
All in all, the total transaction cost seems to be about Rs. 5050. Because the quantity is 1400, this is almost 3.6Rs per lot or 3.6/1000 = 0.0036 per USD. This means that if I buy at 62.0000 and the price goes up, I will make money only after it goes higher than 62.0036. That is almost two ticks.
How can I bring this transaction cost down? Among these charges (Turnover charges / stamp charges / SEBI charges / Brokerage / Service Tax), which can be reduced? And how? The bigger of these items are turnover charge and stamp charge. Do we have any control on these two?
The great thing about currency trading is that there is no STT, imagine if were to be like equity or like CTT in commodity.
Turnover charges, SEBI charges, ST, Brokerage, I guess nothing can change especially considering you have done 17 crores of turnover.
What you could do is, get an address in Karnataka or Andhrapradesh. Use this address proof and change your address with the trading account you have. Maximum stamp duty per contract note is Rs 50 for these two states. So instead of paying Rs 1745 as Stamp, you would pay only Rs 50 .
We are in unison with the fact that you are very proactive in answering all queries here on qna… Its really appreciated.
I had posted a query sometime ago, about having a smart brokerage calculator, especially for CDS… Most of us are small traders and in my opinion, trading forex is easier than equity… but the profitability is eroded by so many charges.
I am aware of the brokerage calculator but I do find it not very handy while determining pips to breakeven.
I might be less educated or my question might come across as naive, but I trust your good spirits to help me/many understand the equation better. I will try my best to not bother you much.
I always prefer forex trading but it somehow is very expensive… For a start, I postulate a maximum of 15 lots on a given trade… would you be able to help me understand what is the breakeven ( for say long at 70.0000).