Let's get a quick refreshment on Bursa Malaysia (KLSE) brokerage, trading cost and break-even price.
0.30% for transaction of RM100,000 and above
2. CLEARING FEE: at 0.003% per transaction limited to maximum RM200 per transaction.
3. STAMP DUTY: RM1 per RM1,000 amount of transaction or fractional part.
Minimum brokerage fixed rate is RM40 : for transaction estimated below RM5,714.29.
If your transaction is below that amount, your brokerage cost (in percentage) will be higher than 0.7%
Note: brokerage for same day buy and sell trades at 0.15% of transaction.
For cash up front:
The brokerage charge is negotiable, thus it can be varied among the stockbrokers. Minimum brokerage rate RM40 doesn't necessarily apply but it is the commonly practice. Same clearing fee and stamp duty apply.
Online/Internet trading: brokerage is negotiable, thus it can be varied among the stockbrokers. Minimum brokerage rate RM40 doesn't apply. Same Clearing fee and stamp duty apply.
Due to competition among the stockbrokers, brokerage for online trading can be very varied. Stockbroking house could have promotions with special brokerage rates from time to time to entice you. You will see zero brokerage rates for the first year of registration offered soon.
Expect a range from RM8 to RM28 for minimum flat brokerage cost. You need to check with stockbrokers. Get the info on:
1. For how long the special rate you are entitled to, could be just a short while.
2. What is the minimum brokerage cost. (very important especially if you trade in small amount : it can be very costly)
3. What is the rate for intra-day trades.
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Most long term investors do not be particular so much about brokerage since they are looking for big profit in the long run and they don't buy and sell often. But for traders and scalpers with frequent trading activities, brokerage cost will affect a lot. Thus, traders need to be particular about brokerage and trading cost.
Traders need to estimate the break`even price before they sell. To get the break even selling price you need to include the brokerage, stamp duty and stamp duty. You need to calculate the cost twice: buying and selling. You need to calculate fast for fast decision. To make your life easier, there are tools to calculate your break even cost that come with some online trading platform. There also some PC software that can do that.
Note that most stock break even calculators consider the shares purchased as part of investment cost.. It just perception. Traders consider shares bought as inventory to turn over before been sold. While for long term investor, shares in hand are assets.
You can try KLSE Calculator (a free software) for calculating trading cost, profit/loss and break even price. Download it at KLSE software
