Calculating the government taxes charged

For every order that's completed successfully, the government may charge a certain fee, which is a fraction of the price at which the instrument was bought or sold. While the amount may seem small, it is important to keep track of government taxes as they may end up eating a significant chunk of your profit at the end of the day.

The government charge depends on the location of the exchange, and varies from segment to segment. For the purpose of this recipe, we will consider government taxes at a rate of 0.1%.

How to do it…

We execute the following steps to complete this recipe:

1. Calculate the government taxes that are charged per trade:

>>> entry_price = 1245
>>> brokerage = (0.1 * 1245)/100
>>> print(f'Government taxes charged per trade: {brokerage:.4f}')

We'll get the following output:

Government taxes charged per trade: 1.2450

1. Calculate the total government taxes that are charged for 10 trades:

>>> total_brokerage = 10 * (0.1 * 1245) / 100
>>> print(f'Total Government taxes charged for 10 trades: \
            {total_brokerage:.4f}')

We'll get the following output:

Total Government taxes charged for 10 trades: 12.4500

How it works…

In step 1, we start with the price at which a trade was bought or sold, entry_price. For this recipe, we have used 1245. Next, we calculate 0.1% of the price, which comes to 1.245. Then, we calculate the total brokerage for 10 such trades, which comes out as 10 * 1.245 = 12.245.

For every order, government taxes are charged twice. The first time is when the order has entered a position, while the second time is when it has exited the position. To get the exact details of the government taxes that are charged for your trades, please refer to the list of government taxes provided by your exchange.