Intraday trading vs long term investment
- Thread starter shivani bansal
- Start date
Both are different as trading is like buying n selling like a shop keeper and checking balance in a day where in you might end up in negative. In long investment time is your friend as if the investment is in negative then also you can give it time to go positive.
As far profitability is there both are same and majorly depends on your strategy and attitude. If you are having a quick and high accuracy then intraday is good.
But both require quick, discipline and persistency.
As far profitability is there both are same and majorly depends on your strategy and attitude. If you are having a quick and high accuracy then intraday is good.
But both require quick, discipline and persistency.
Intraday trading is much more profitable than investing. If you consider the return of a professional day trader vs professional investor like HNI in percentage, then investors return is tiny amount.
But, making a profit in day trading is much much harder than investment.
When your trading capital goes big gradually, it is hard to maintain similar percentage in trading. But always for a pro trader, the percentage of return is much bigger than an investor.
A pro trader can easily get 200-300% annualize return on a trading capital up to 5-20 Cr. IMO. But it's very difficult to maintain the same amount of return with 100 Cr trading capital
On the other hand, a big pro-investor/fund manager can get approx 20-30% return on even 1000 Cr investment.
So you can see both are completely different.
There is no comparison of return in Trading vs Investing mainly bcoz traders can use big leverage, 10 times-20 times or even more. The loss or profit just manifold proportionately. Plus the frequency of trades and volatility are much higher with the small time frame. So it just increases the profit or loss percentage.
But, the fact is most people will easily burn out the whole money in trading. If you invest a good amount of money in say Nifty ETF, and sleep for 12-20 years. You can easily get the car, home with that.
But in trading, if you take a leverage position and sleep well, next day morning your whole capital might be zero even negative (margin call) if there is big global market crashed overnight. So be careful, trading is riskier, that's why the return(+ve or -ve) is big (no comparison with investment).
As a general people don't have more than 5-10 Cr trading or investing capital, so in that case pro vs pro trading beat investment there by atleast 8-10 times in terms of return.
But, making a profit in day trading is much much harder than investment.
When your trading capital goes big gradually, it is hard to maintain similar percentage in trading. But always for a pro trader, the percentage of return is much bigger than an investor.
A pro trader can easily get 200-300% annualize return on a trading capital up to 5-20 Cr. IMO. But it's very difficult to maintain the same amount of return with 100 Cr trading capital
On the other hand, a big pro-investor/fund manager can get approx 20-30% return on even 1000 Cr investment.
So you can see both are completely different.
There is no comparison of return in Trading vs Investing mainly bcoz traders can use big leverage, 10 times-20 times or even more. The loss or profit just manifold proportionately. Plus the frequency of trades and volatility are much higher with the small time frame. So it just increases the profit or loss percentage.But, the fact is most people will easily burn out the whole money in trading. If you invest a good amount of money in say Nifty ETF, and sleep for 12-20 years. You can easily get the car, home with that.
But in trading, if you take a leverage position and sleep well, next day morning your whole capital might be zero even negative (margin call) if there is big global market crashed overnight. So be careful, trading is riskier, that's why the return(+ve or -ve
) is big (no comparison with investment).As a general people don't have more than 5-10 Cr trading or investing capital, so in that case pro vs pro trading beat investment there by atleast 8-10 times in terms of return.
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Just saying from the other side -risk
Say a person started with a capital of 1lakh 10 years back
Assuming 100% return compounded - 1 -2 -4 -8-16-32-64-128-256-512 Lakhs
Assuming 200% return compounded - 1 -3-9-27-81-243-7C-21C-63C-189C
Assuming 300% return compounded - 1 -4-16-64-256-10.24C-40.96C-163C-655C-2621C
Only a few in a million could have reached this level and again may be through Swing trading defenitely not by day trading.
95% of traders are loosers is the common saying.
Investment again is not that easy one has to enter the right stocks waiting for right price and not all stocks yield 25% year on year.People had lost their hard earned money in Bad Investments too.
Investment in Nifty since inception has given 14% per annum compounding i.e if one had invested when Nifty started at 1000.
Both Trading and Investment are risky and only the skill and experience of the person makes the difference.
Say a person started with a capital of 1lakh 10 years back
Assuming 100% return compounded - 1 -2 -4 -8-16-32-64-128-256-512 Lakhs
Assuming 200% return compounded - 1 -3-9-27-81-243-7C-21C-63C-189C
Assuming 300% return compounded - 1 -4-16-64-256-10.24C-40.96C-163C-655C-2621C
Only a few in a million could have reached this level and again may be through Swing trading defenitely not by day trading.
95% of traders are loosers is the common saying.
Investment again is not that easy one has to enter the right stocks waiting for right price and not all stocks yield 25% year on year.People had lost their hard earned money in Bad Investments too.
Investment in Nifty since inception has given 14% per annum compounding i.e if one had invested when Nifty started at 1000.
Both Trading and Investment are risky and only the skill and experience of the person makes the difference.
@jagankris
such easy compounding concept is NOT valid in trading. There is psychological limit of how much lots you can handle, also cost of slippage increases with higher volume.
I am getting more than 220% yearly return in average from day trading since last 6-7 years (trading more than 10 years).
But, I such fast compounding is not possible. I don't think it even in my dreams.
Traders hit their psychological limit of trading with maximum capital, then after some time they overcome it. Capital increasing in trading is slow process. I have increased my capital slowly in last 10 years I know traders psychology.
How much pressure we can handle actually increases with time and experience. Such excel sheet compounding never work in real life. But, yes 200-300% return possible from trading consistently over long years if we can understand our limit - the maximum capital we can handle comfortably.
You have overlooked above statement.
The easiest process of burning out the whole capital is trying to compound capital without knowing the psycholigical limit of handling maximum capital at a time. You always need to shift some profit for backup in a way that, even if 100% capital is lost you can fill it. If u know u can fill it, u have greatest psychological advantage of tension free trading. Then you can go for higher risk and higher return trades and you can wait for long to run on profit patiently. Smart money management never favour such compounding bcoz u always need to shift part of profit for backup caiptal, as soon as you increase the capital for trading. Remember this always. This is the way a pro trader cut the risk.
There is no risk in my trading, you know why? Bcoz even if I lost 100% capital, I can fill it next day. I am confident I can get back it soon. When we are trading, we must remember we are using leverage so actual turnover is much much higher. We can't compound it so easily bcoz we need to save backup. All big pro traders are using only a part of capital for trading, they can refill it multiple times if they required(although they know they don't require in real life). There is min risk due to their money management.
such easy compounding concept is NOT valid in trading. There is psychological limit of how much lots you can handle, also cost of slippage increases with higher volume.
I am getting more than 220% yearly return in average from day trading since last 6-7 years (trading more than 10 years).
But, I such fast compounding is not possible. I don't think it even in my dreams.
Traders hit their psychological limit of trading with maximum capital, then after some time they overcome it. Capital increasing in trading is slow process. I have increased my capital slowly in last 10 years I know traders psychology.
How much pressure we can handle actually increases with time and experience. Such excel sheet compounding never work in real life. But, yes 200-300% return possible from trading consistently over long years if we can understand our limit - the maximum capital we can handle comfortably.
You have overlooked above statement.
The easiest process of burning out the whole capital is trying to compound capital without knowing the psycholigical limit of handling maximum capital at a time. You always need to shift some profit for backup in a way that, even if 100% capital is lost you can fill it. If u know u can fill it, u have greatest psychological advantage of tension free trading. Then you can go for higher risk and higher return trades and you can wait for long to run on profit patiently. Smart money management never favour such compounding bcoz u always need to shift part of profit for backup caiptal, as soon as you increase the capital for trading. Remember this always. This is the way a pro trader cut the risk.
There is no risk in my trading, you know why? Bcoz even if I lost 100% capital, I can fill it next day. I am confident I can get back it soon. When we are trading, we must remember we are using leverage so actual turnover is much much higher. We can't compound it so easily bcoz we need to save backup. All big pro traders are using only a part of capital for trading, they can refill it multiple times if they required(although they know they don't require in real life). There is min risk due to their money management.
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@jagankris
such easy compounding concept is NOT valid in trading. There is psychological limit of how much lots you can handle, also cost of slippage increases with higher volume.
I am getting more than 220% yearly return in average from day trading since last 6-7 years (trading more than 10 years).
But, I such fast compounding is not possible. I don't think it even in my dreams.
Traders hit their psychological limit of trading with maximum capital, then after some time they overcome it. Capital increasing in trading is slow process. I have increased my capital slowly in last 10 years I know traders psychology.
How much pressure we can handle actually increases with time and experience. Such excel sheet compounding never work in real life. But, yes 200-300% return possible from trading consistently over long years if we can understand our limit - the maximum capital we can handle comfortably.
You have overlooked above statement.
The easiest process of burning out the whole capital is trying to compound capital without knowing the psycholigical limit of handling maximum capital at a time. You always need to shift some profit for backup in a way that, even if 100% capital is lost you can fill it. If u know u can fill it, u have greatest psychological advantage of tension free trading. Then you can go for higher risk and higher return trades and you can wait for long to run on profit patiently. Smart money management never favour such compounding bcoz u always need to shift part of profit for backup caiptal, as soon as you increase the capital for trading. Remember this always. This is the way a pro trader cut the risk.
There is no risk in my trading, you know why? Bcoz even if I lost 100% capital, I can fill it next day. I am confident I can get back it soon. When we are trading, we must remember we are using leverage so actual turnover is much much higher. We can't compound it so easily bcoz we need to save backup. All big pro traders are using only a part of capital for trading, they can refill it multiple times if they required(although they know they don't require in real life). There is min risk due to their money management.
such easy compounding concept is NOT valid in trading. There is psychological limit of how much lots you can handle, also cost of slippage increases with higher volume.
I am getting more than 220% yearly return in average from day trading since last 6-7 years (trading more than 10 years).
But, I such fast compounding is not possible. I don't think it even in my dreams.
Traders hit their psychological limit of trading with maximum capital, then after some time they overcome it. Capital increasing in trading is slow process. I have increased my capital slowly in last 10 years I know traders psychology.
How much pressure we can handle actually increases with time and experience. Such excel sheet compounding never work in real life. But, yes 200-300% return possible from trading consistently over long years if we can understand our limit - the maximum capital we can handle comfortably.
You have overlooked above statement.
The easiest process of burning out the whole capital is trying to compound capital without knowing the psycholigical limit of handling maximum capital at a time. You always need to shift some profit for backup in a way that, even if 100% capital is lost you can fill it. If u know u can fill it, u have greatest psychological advantage of tension free trading. Then you can go for higher risk and higher return trades and you can wait for long to run on profit patiently. Smart money management never favour such compounding bcoz u always need to shift part of profit for backup caiptal, as soon as you increase the capital for trading. Remember this always. This is the way a pro trader cut the risk.
There is no risk in my trading, you know why? Bcoz even if I lost 100% capital, I can fill it next day. I am confident I can get back it soon. When we are trading, we must remember we are using leverage so actual turnover is much much higher. We can't compound it so easily bcoz we need to save backup. All big pro traders are using only a part of capital for trading, they can refill it multiple times if they required(although they know they don't require in real life). There is min risk due to their money management.
Probability of loss or profit = exposure (time) X capital
to keep loss low :- either reduce time in markets or reduce capital invested
as a day trader - one reduces exposure (time)
as a investor - one reduces capital (invests only what one has - as compared to a day trader who may be using margin money)
to keep loss low :- either reduce time in markets or reduce capital invested
as a day trader - one reduces exposure (time)
as a investor - one reduces capital (invests only what one has - as compared to a day trader who may be using margin money)
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