Hello fellow traders,
Intraday trading is profitable. I will show you how!
Introduction:
Let's say you invest in top voluminous stocks with minimum volume 50,00,000 at price range 5-10rs. [you will always find one or two]
Exchange= BSE.
Given, the tick 0.01 is 0.1% of Rs. 10, typically high-low spread of voluminous stocks tend to be more than 1% of its value.
Take, for example, IDEA, priced at Rs. 10. {current price= 7.50}
Avg. High-low spread {2 weeks} = 0.12 (1.2% of Rs. 10)
Process:
You employ technical indicators (momentum, RSI, VWI) and make 0.01 rs. per stock. That is, 0.1% of stock value.
Calculating it on 52-wk period, it gives 25.1% ROI.
But, as we are day-trading, our broker gives us leverage. ( it can be upto 5X)
Assuming 2X leverage, the ROI goes up to 50.2%.
That is a staggering return, right!
Conclusion:
But don't fall prey to such mathematical nuisance. Costing for STT, Exchange charges, GST, Stamp duty, etc. {assumed 0 brokerage}
The return comes down to 37.5%.
Yeah, that's right! A staggering 27% tax/charges on your earnings. And if your earnings fall in the income tax bracket, pay another 15% (STCG).
Solution:
But that can be mediated if your broker provides greater leverage thus pulling down the margin requirement as well as increasing quantity of stocks. Also, I have taken target at 1 tick (0.01), if you see momentum/trend, you could greatly increase returns.
Intraday trading is profitable. I will show you how!
Introduction:
Let's say you invest in top voluminous stocks with minimum volume 50,00,000 at price range 5-10rs. [you will always find one or two]
Exchange= BSE.
Given, the tick 0.01 is 0.1% of Rs. 10, typically high-low spread of voluminous stocks tend to be more than 1% of its value.
Take, for example, IDEA, priced at Rs. 10. {current price= 7.50}
Avg. High-low spread {2 weeks} = 0.12 (1.2% of Rs. 10)
Process:
You employ technical indicators (momentum, RSI, VWI) and make 0.01 rs. per stock. That is, 0.1% of stock value.
Calculating it on 52-wk period, it gives 25.1% ROI.
But, as we are day-trading, our broker gives us leverage. ( it can be upto 5X)
Assuming 2X leverage, the ROI goes up to 50.2%.
That is a staggering return, right!
Conclusion:
But don't fall prey to such mathematical nuisance. Costing for STT, Exchange charges, GST, Stamp duty, etc. {assumed 0 brokerage}
The return comes down to 37.5%.
Yeah, that's right! A staggering 27% tax/charges on your earnings. And if your earnings fall in the income tax bracket, pay another 15% (STCG).
Solution:
But that can be mediated if your broker provides greater leverage thus pulling down the margin requirement as well as increasing quantity of stocks. Also, I have taken target at 1 tick (0.01), if you see momentum/trend, you could greatly increase returns.
