Bakwaas Trading

[augubhai]

Cost Barrier

Here's some more analysis of my day trading since I changed my trading style, starting Aug 30 2016. Prior to that, I day traded every market day. After the change, I day trade about 50% of the market days.

Calendar  Market  Days     Gross    Net      Difference
Month     Days    Traded   Return   Return
Aug 2016      2       1    19.57%   19.12%      0.44%
Sep 2016     20      11    29.54%   21.61%      7.93%
Oct 2016     19       9    12.48%    6.03%      6.45%
Nov 2016     21       7    32.21%   26.58%      5.64%
Dec 2016     22       8    13.89%    8.74%      5.15%
Jan 2017     21       9    -6.49%  -11.85%      5.35%
Feb 2017     19       7     7.07%    1.56%      5.50%
Mar 2017     22      12    -0.76%   -8.92%      8.16%
Apr 2017     18       8    23.31%   18.43%      4.87%
May 2017     22      12    -9.55%  -18.12%      8.58%
Jun 2017     21      12    22.61%   14.20%      8.41%
Jul 2017      5       2    11.64%   10.58%      1.06%
                                           
Total       212      98    77.81%   37.68%     40.13%


1. Gross return is the MTM return before deducting ant costs. Slippage is already part of MTM.
2. Net return is the return after all broker deducted charges and taxes, including call-n-trade charges. This does not include charges not deducted by the broker, like data feed costs, software license, etc.
3. I have used % to measure returns, though I prefer other measures.
4. The returns shown, especially the total returns, are not very accurate, because I add and withdraw cash from the trading account frequently. If compounded accurately, the returns would be significantly better than those shown here.

Every month, between 5% to 9% of my capital goes towards expenses (charges and taxes). To make a profit, I need to earn more than that. This cost barrier is one of the major barriers to profitable trading, and is significantly more in case of day trading than swing trading. I wonder what kind of barriers are faced by scalpers. At some point, when the capital increases considerably, it might even be sensible to move to countries with lower taxation.

 

[timepass]

Which broker are you using ? Maybe you should try some fixed monthly brokerage plans.

or now there is Finvasia with 0% brokerage.

Cost Barrier

1. Gross return is the MTM return before deducting ant costs. Slippage is already part of MTM.
2. Net return is the return after all broker deducted charges and taxes, including call-n-trade charges. This does not include charges not deducted by the broker, like data feed costs, software license, etc.
3. I have used % to measure returns, though I prefer other measures.
4. The returns shown, especially the total returns, are not very accurate, because I add and withdraw cash from the trading account frequently. If compounded accurately, the returns would be significantly better than those shown here.
[/CODE]

Every month, between 5% to 9% of my capital goes towards expenses (charges and taxes). To make a profit, I need to earn more than that. This cost barrier is one of the major barriers to profitable trading, and is significantly more in case of day trading than swing trading. I wonder what kind of barriers are faced by scalpers. At some point, when the capital increases considerably, it might even be sensible to move to countries with lower taxation.

 

[augubhai]

Which broker are you using ? Maybe you should try some fixed monthly brokerage plans.

or now there is Finvasia with 0% brokerage.

I am using RKSV. Until March, I was using their Rs. 1947 fixed brokerage plan. But now, I have shifted to Rs. 20 per trade plan, which is cheaper for me right now because I am making fewer trades. I have no issues with the RKSV brokerage, but a recent change that they made to their RMS is a concern.

 

[daytradernifty]

Hi Augubhai,
if You are profitable these can be shown as expenses. Treat them as advanced tax.

 

[daytradernifty]

Just to clarify further, Traders have to show audit report.
All expenses like stamp duty/ brokerage/ STT can be treated as advanced tax. So No need to get disheartened. If you want Trading to be your full time profession.
Just Treat them as TDS

 

[ajeetsingh]

Just to clarify further, Traders have to show audit report.
All expenses like stamp duty/ brokerage/ STT can be treated as advanced tax. So No need to get disheartened. If you want Trading to be your full time profession.
Just Treat them as TDS

Means, Can we get refund for STT ?

 

[aarna singh]

I want to have some trading suggestions.

 

[Smart_trade]

Means, Can we get refund for STT ?

No....these are not tax credits like TDS or advance tax paid. Few years back only STT was treated as tax credit but not so anymore.It was amended in one of the budgets.

Brokerage,STT,stamp duty and all other charges are deductible for calculating net profit.Our contract gives net payable/ receivable amounts so to this you have to add back these charges to get gross profits and deduct these charges again to get net profit...so it makes no sense ,just take the net figures from contracts which already deducts all the charges and levies.

There is a difference in these being deductible and these being considered as tax credits.So STT is NEVER refunded as it is not a tax credit.

Smart_trade

 

[Smart_trade]

Just to clarify further, Traders have to show audit report.
All expenses like stamp duty/ brokerage/ STT can be treated as advanced tax. So No need to get disheartened. If you want Trading to be your full time profession.
Just Treat them as TDS

No ,your understanding is wrong.

Smart_trade

 

[daytradernifty]

No ,your understanding is wrong.

Smart_trade

Hi ST,
Can you elaborate please. My understanding is at the end of the year while computing taxes we can include STT and stamp duty as business expenses. (Provided we file audited report).