#### Q. How do I calculate brokerage costs on a trade?

To do this, we’ll need to lay out all the necessary information to calculate what brokerage costs you’ll pay…

Let’s use a recent Richemont trade as an example and some assumptions:

Portfolio value: R120,000
Brokerage rate in: 0.30%
Brokerage rate out: 0.30%
Entry: R2,412.19
Stop loss: R2,229.03
Take profit: R2,705.20

#### Calculation #1: Calculate your ENTRY brokerage cost with CFDs

Max % risk = (Portfolio value X 2%)
= (R120,000 X 2%)
= R2,400

Step #2: Find out the rands risked in trade
Rands risked = (Entry – Stop loss)
= (R2,412.19– R2,229.03)
= R183.16

Step #3: Calculate the number of CFD contracts to trade

No. CFDs = (Max risk ÷ Rands risked)
= (R2,400 ÷ R183.16)
= 13

Entry exposure = (Entry price X No. CFDs)
= (R2,412.19 X 13 CFDs)
= R31,358.47

Brokerage in = (Entry exposure X Broker rate in)
= (R31,358.47 X 0.30%)
= R94.07

This means, you’ll need to pay a brokerage of R94.07 in order to buy (go long) 13 Richemont CFDs.

Now we can move onto the next brokerage leg.

#### Calculation #2: Calculating your EXIT brokerage cost with CFDs

Exit exposure = (Exit price X No. CFDs)
= (R2,705.20 X 13 CFDs)
= R35,167.60

Step #2: Calculate your brokerage leg out

Brokerage out = (Exit exposure X Broker rate out)
= (R35,167.60 X 0.30%)
= R105.50

Step #3: Calculate the total brokerage for the CFD trade

Total brokerage = (brokerage leg in + Brokerage leg out)
= (R105.50 + R94.07)
= R199.57

This means, if the trade hit your take profit level you would have ended up paying a total brokerage of R199.57 for your Richemont Long trade.

Now you know how to calculate each brokerage leg in, out and total for whenever you take a CFD trade with Red Hot Storm Trader or Pickpocket Trader.