How to Compute Charges When Trading Stocks

In a previous blog, I have mentioned about charges whenever we buy or sell stocks.

Yes, whenever you do so, you are helping the Philippine Government by paying taxes.

With the TRAIN Law, the taxes are higher.

Sometimes you thought that you have gained from the stocks you bought only to find out that you actually did not and abonado ka pa!

That's because of the broker’s commission, VAT on broker’s commission, PSE Transaction Fee and Stock Transaction tax that you had to pay.

If you can, do keep a worksheet handy in order to compute fast how much you're gaining (or losing) when you sell your shares.

Take a look at the video below to see how you these computations are made.

Now that you know how to compute charges, factor this expense in so you can trade profitably in stocks.

Stock Trading in Pinas for Beginners

It was April 2018 when I started my adventure in stock trading. I guess a year after, I have learned all sorts of experiences through it. I had gains and losses, both actual and paper. I had experience trading in the blue-chip stocks. I also experienced trading in the trending stocks, not to mention the “paluge” stocks. I had emotional ups and downs. I had bought stocks when I intend to sell them kasi nagmamadali and because I’m doing it myself an online trading platform. I had earned some dividends.

I have to tell you that I did not read tons of sources in order to learn STOCKS. I believed in learning by doing. By doing, I had learn how to look a stock’s BID vs ASK information, as well as PREV, OPEN, HIGH, LOW, and VOL. I had used DAY, GTW and GTM Term. I had learned how to look at charts especially the candle-stick ones.

I had felt ups and downs when I learned how to look at PROFIT/LOSS.

I had learned how to compute the charges (broker’s fee, tax etc) made per transaction.

I’m sure there’s more to learn especially if you intend to spend more time for it than most people. You can get very technical with it too. You will discover your risk appetite. You will learn valuable experience along the way which you may share with others. You will also learn from others who are very generous with their insights. And above all, you will remind yourself that a lot in stocks is about speculation. You will learn to be patient and do due diligence of learning more about a stock.

As for me, I’m contented with my strategy. I realized that I’d rather seize opportunities when they come and accept that they don’t come everyday. Meanwhile, get busy learning other things too!

Let’s start from the very beginning….DO RE MI…

Buying a company’s shares or stocks means that you become part owner of the company. The return from stocks come in the form of dividends or capital gains.

Capital Gain

This is the amount you earn when you sell a stock at a higher price than when you bought it. In the example below, there is a capital gain of 796.23 when I sold my 100 shares of BDO stocks at 140 (originally bought for 130.4)

The trading market for stocks in the Philippines is Philippine Stock Exchange. Companies must be listed before their stocks can be traded. Stocks are not purchased directly from a listed company but through registered stock brokers. These are First Metro Securities (FIRSTMET), Col Financial (COL), BPI Securities Corp (BPI), to name a few. When you use their services, you pay for the broker’s fee.

BUY/SELL - transactions involve in stock trading

Total Charge - charge you pay whenever you buy or sell stocks. There is a bigger charge when you sell stocks. In the illustration above, the charge for buying is 38.47 while the charge for selling is 125.30. This charge includes the broker’s fee, VAT on broker’s fee, PSE Transaction Fee and Stock Transaction tax based on TRAIN LAW. I will talk about how to compute this soon.

Total Value - the amount you pay when you buy stocks, or the amount you receive when you sell stocks.

Capital Gain/Loss - the difference between the Total BUY Value and Total Sell Value

Dividends

This a payment made by the company according to the number of shares. This is not guaranteed and is usually a distribution of profits. 

As you can see in the illustration above, Petron (Stock Code: PCOR) pays a dividend of Php 0.1 per share and will be reflected on the cash balance of the person in the online trading system provided by the broker FIRSTMET.

Next time, I will talk about how to get started in actual trading through FIRSTMET .