Day Trading...Brokerage, Taxes ate me live

GENIETRADE

Well-Known Member
#2
Even the smallest mistakes in execution, unresolved psychological issues, lack of proper money management, lack of discipline, leverage, and cost of trade will result in this catastrophic result.
The hype created in youtube channels about day trading is an illusion. None is truthful about the realities of day trading.
99% will fail in day trading within a year. The probability of winning is strongly against us.
You will have one year to prove whether you will be in the elite 1% or not. If not, exit royally.
 

newtrader101

Well-Known Member
#3
Even the smallest mistakes in execution, unresolved psychological issues, lack of proper money management, lack of discipline, leverage, and cost of trade will result in this catastrophic result.
The hype created in youtube channels about day trading is an illusion. None is truthful about the realities of day trading.
99% will fail in day trading within a year. The probability of winning is strongly against us.
You will have one year to prove whether you will be in the elite 1% or not. If not, exit royally.
The first step is to develop trading longevity. The only way for this is to limit your losses (3%, 2%,1%, 0.5%...). And you can do that only while entering the trade. Can't apply brakes later.
 
#4
Even if one is trading in stocks in short term by taking delivery ( trading for 3-4 % moves ) , about 30-35 % of short term profits go in brokerage,STT,Stamp Duty ,SEBI charges etc. The largest share goes in STT. So in delivery based trading also too frequent buy/sell takes away large part of our profits.
 

TracerBullet

Well-Known Member
#5
1) STT is very high, for intraday and overnight in cash too if you are holding for a few days only.

2) For intraday in stocks, Slippage cost - diff between entry price and filled price for entry + exit order can also be very high.
On average, it is equal or more than taxes+brokerage once you scale up. So simple estimation of cost = 2* costs.

3) And vs backtest, there can be further degradation due to data errors - entry/stop filled but does not show up in data.

So edge must be much more than cost. Its possible, but yeah govt takes away a large cut before you make money and then takes away another large cut once you make money ...

Or hold for longer periods, say using weekly charts or look at FnO overnight but that might need a lot of capital depending on how you trade. Or just give up, and look at investing + some technical rules if they help ...
 
Last edited:

primitivetrader

Well-Known Member
#6
In day trading, brokerage and associated taxes ate me live. Proof.......
View attachment 46253
keep aside the cost it's going to be high in day trading. first, do the analysis of gross PNL.

what is your average R:R?
what is your win %age ?

I don't have much idea about commodity but in nifty trading, I know my baseline with regard to R:R and win % . what i have done is i always add the cost into my R:R.

secondly, I too have faced slippage which to a significant level has been reduced as I have switched to CO/BO. I always prefer pending orders, which as per my understanding is difficult with many day trading methods. a few times there are surprises but that is part of the game.
 

GENIETRADE

Well-Known Member
#8
keep aside the cost it's going to be high in day trading. first, do the analysis of gross PNL.

what is your average R:R?
what is your win %age ?

I don't have much idea about commodity but in nifty trading, I know my baseline with regard to R:R and win % . what i have done is i always add the cost into my R:R.

secondly, I too have faced slippage which to a significant level has been reduced as I have switched to CO/BO. I always prefer pending orders, which as per my understanding is difficult with many day trading methods. a few times there are surprises but that is part of the game.
When I searched my pockets I thought I lost only Rs.70000 in trading which is not a big deal. But the charges I paid are Rs.4 lahks approximately to trade. For each Re1 trading loss, I paid Rs.4 as charges. Isnot it hefty when you count in any form of business?

As such even if I make Rs.4 trading profit, I still need to pay Rs.4 as charges and I earn nothing finally. Loss of time, effort, and interest on capital.

what is your average R:R? 1:1
what is your win %age ? 66%
 

TracerBullet

Well-Known Member
#9
Costs are high, but someone with a better edge will pay say 1/3rd in taxes as ST mentioned ( and another 1/3rd after income tax ...) . And that is possible in intraday.

Some possible things to look at.

1) Sample period is still low. Edge is over a larger period - maybe a year might be enough to give some idea but it depends on how you trade. It is possible, that this was a draw down period for you and things will get better. I dont know if its true, only you backtest will tell you what you can reasonably expect. But you have to take all trades as per system for a prolonged period.

Last year i had a ~5 month period when i was flat overall. This was after a good period and was followed by one too. But if i had only traded in that 5 month period then i would see that i made close to nothing and everything went to others.

2) I know nothing of your system - but, from what i have seen, intraday systems for us generally do better if you allow profit to run - accepting lower win rate in order to target larger moves. Costs are high and fixed and so targeting smaller moves does not work as well. But this depends on your system and must be confirmed.
 

primitivetrader

Well-Known Member
#10
When I searched my pockets I thought I lost only Rs.70000 in trading which is not a big deal. But the charges I paid are Rs.4 lahks approximately to trade. For each Re1 trading loss, I paid Rs.4 as charges. Isnot it hefty when you count in any form of business?

As such even if I make Rs.4 trading profit, I still need to pay Rs.4 as charges and I earn nothing finally. Loss of time, effort, and interest on capital.

what is your average R:R? 1:1
what is your win %age ? 66%
your problem is not the cost (taxes and all) but your R:R.

Your win rate is good for this R: R if you are trading fx market. in Indian mkts, you won't be able to make money with this RR. if it's gross then big problem as you are winning less on every profitable trade and losing more on every losing trade.
 

Zerodha – Open Paperless Account

Open online account with Zerodha. Free delivery trading and Max Rs 20 for Intraday, F&O, Currency and Commodity Trading. Intraday High leverage with MIS, CO and BO.

Name:Phone:
Email:City:
State:
Are you a day trader?