How Much we need to earn in Intraday Trading

We all do intraday trading (almost 90 % among us) , because this is shortest way to earn from stock market in quick matter.

But how many among us earns in Intraday trading on daily basis , most of the times at the end of the we have only earned some hopes that oh i made this mistake else i would have been in profits today.

And one day hopes also die bcoz capital vanishes and we realize that now only 20 % of original capital has left.

Why Intraday trader looses

Many times bcoz of greed , once we have entered in any position and it went into profit then also we looses bcoz of sudden volatility in market , then we think we should have used trailing stoploss . and will implement it from tomorrow.

Next day we use trailing stoploss and stock after hitting our trailing stoploss goes up by 5 % , then again we think ohhhhhhhh god . What should i do.

So what does matter most in Intraday trading is identification of correct Target. Since Intraday trading involves so many factors , like stock technicals , nifty / market trend , global cues etc etc.. , its not always possible to trace every factor with accuracy. and we losses again .......................



Try this concept for one week

Set target of 1 % and stoploss at 1 %

Always enter if u are 90 % or more % sure of trend


Power of 1%


Most of traders do not understand value of 1% if you can book profit at 1% with good accuracy then you can do wonders .

Just explore power of 1% with example

Mr. X Started trading with 25,000/-and his broker gives him 5 times intraday limit so he can trade with limit of 1 lac in intraday. Mr. X decides that he will trade max 2 stocks at any given point of time so he divided by his limit by 2 and started trading . he buys or sell stock worth rs.50,000/-at a time..

Mr. X always trade with 1 % stop loss and book profit at 1% target it means that if target hits then he earns 1% of Rs.50,000/- i.e. RS. 500 less RS. 50 (Brokerage and another expenses) = 450 .

If stop loss hits in any trade then Mr. X looses RS. 500 + RS. 50 = 550 , SO if he trade is profitable then he earns RS. 450 and if trade is unsuccessful then he looses RS. 550 .

Assuming 20 trading days in a month , we try to find out how much he earn or looses at end of the month , let try different possibilities based on his accuracy. We assume that every day he trades in 4 stocks , so in a month he made trades in 20 * 4 = 80 .



1) If he trades with 80 % accuracy then 64 profitable trade and 16 loosing trades.

a) What he earned :

64 * 450 = 28,800 (After adjusting brokerage of RS. 50 per trade)

b) What he lost

16 * 550 = 8,800 (including brokerage)

Net Profit=28,800-8,800=20,000/- i.e. 100 % times of his capital RS. 20,000



2) If he trades with 70 % accuracy then 56 profitable trade and 24 loosing trades.

a) What he earned :

56 * 450 = 25,200 (After adjusting brokerage of RS. 50 per trade)

b) What he lost

24 * 550 = 13,200 (including brokerage)

Net Profit=25,200-13,200=12,000/- i.e. 60 % times of his capital RS. 20,000



If you think trading with 80 % accuracy is bit tough then even with 70 % accuracy, one can easily earn 60 % of his capital.


If once can trade with even 60 % accuracy then he will earn some thing , or say atleast he won't loose . and if a trader can not trade with even 60 % accuracy then he must left trading

A good one !
But instead of taking 1% profit how about moving SL 1% below at every % ?

No a bad idea , but i am asking to try above concept for one week you will feel difference , this difference is same like difference between success and failure.

in theory or in paper trading moving of SL 1 % below at every % rise looks mind blowing idea but when real money is involved in volatile market result come opposite


buy and exit at 1 % gain and tension over , no moving sl nothing just look for new trade , try it for one week

IMHO your risk:reward ratio is arguably poor, the minimum I recommend is 1:1 but still, most pros may argue about it too, as they tend to follow a system having 1:3+ Risk: Reward, always tell you cut the looser quick and let your winner run. To understand how to do it will take a normal trader ages, as that is where your edge plays a dynamic role in a long run.
Being right in the market is not the trick as markets dynamics changes with time and so does your systems success rate. You can never rely on one specific system based on its success rate, some works for a long period of time and still needs a lot of discretionary approach. 80% win rate systems do exists but very rare chance of its survival in a long run. IMHO one would be better off identifying potential trades with very low risk and high reward, as it would outperform the 80% win rate system.

Thanks for nicely written post that is filled with example. You have hit the nail on the head by addressing Position Size (splitting account in 2 trades with equal amount) and Risk management (1% of trade size)part of trading.
To add my 2 cents on this

This can be summarised in simple equation by
X = % winning trades * average win amount - % losing trades * average loss amount eg - in case 1 above = X = 0.8*450 - 0.2*550 = +250.

As long as X (called expectancy of the trading system) is +ive in above equation, trader will be profitable in long run. Then it is just matter of putting 80 trades or 100 trades to see the result

I disagree with this because, if u put the value in above equation and have average profit bigger then average loss, the even lower success rate will give u win.
eg - for Risk 0.5 %, and Reward of 1.5% the trader has to be right just 30% of the time and still come back winning (it gives the expectancy of + 0.1)

Crux of the issue is to find a method, that applied consistently will give u predictable result. If there is no method or rules and trader applies different rules every day, then nobody can
guarantee win %. number. Even if the equation works with 60% win ratio, that is fine.. but "Where is the method or set of rules That works 60% of the time?". that's the answer people need to find along with above risk and money mgmt rules.. to be consistently successful,

Happy Trading.

Mathematically,

Expectancy = [(Probability of Win * Average Win (reward) ) - (Probability of Loss * Average Loss(risk))] - (Number of trades x brokerage)

Two variables here:
1. Risk:Reward ratio
2. Probability of Win

With the right combination of the above, you can be profitable. It is not necessary that we should have 60% or more wins to be a profitable trader.

Just my views. Good post, ashes.

Sir their are many such method available , we have to stick to one game plan , like every plan , no plan is 100 % fool proof , if we talk about how to trade with 60 % accuracy then trading on breakouts is best and easy method to trade

The Win/Loss Ratio Mystry
One common adage on this subject that is completely wrongheaded is: You can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits. The problem in a nutshell is that human nature does not operate to maximize gain but rather to maximize the chance of a gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance. …

What really matters is the long-run distributions of outcomes from your trading techniqs, systems, and procedures. But, psychologically, what seem of paramount importance is whether the positions that you have right now are going to work. Current positions seem to be crucial beyond any statistical justification. It’s quite tempting to bend your rules to make your current trades work, assuming that the favorability of your long-term statistics will take care of future profitability. Two of the cardinal sins of trading - giving losses too much rope and taking profits prematurely - are both attempts to make current positions more likely to succeed, to the severe detriment of long-term performance.


I don't have a problem letting my profits run, which many traders do. You have to be able to let your profits run. I don't think you can consistently be a winner trading if you're banking on being right more than 50 percent of the time. You have to figure out how to make money by being right only 20 to 30 percent of the time.
''New Market Wizards"

What a thread... beautiful...! You have to figure out how to make money by being right only 20 to 30 percent of the time. Amen to that..!

Wonderful thread.

My two cents to it.

The question needed to be asked is whether you are fundamental trader or a technical trader.

A fundamental by virtue(being an operator/insider or other factors) might enter on a up move a few notches below the technical trader.

A technical one might see an upmove only after it has formed so , his way of looking wud be different.

As novice traders tend to be none, he sees a move and thinks he cud have captured it, top to bottom and he does a few times, thinks he is great. A solid RRR(reward to risk ratio) rule is absent.