Intraday Trading: Pramod Kumar is studying Sotck market since 1977, He answered the question on how much you can earn from trading you will get an idea before investing your money in market so let's read what he says.
How much do you earn daily in intraday trading?
Intra day trading is the current fad in the stock markets.
New traders come in with some cash, some information (not knowledge) Gleaned from online resources, an account with some discount broker and dreams of huge daily profits in their eyes.
Then there are experts on the business channels, treating trading as a kind of 20–20 cricket match and almost giving a running commentary on the performance of their tips for the day.
Spurred on by these sound bytes these new traders embark upon their journey into the wonderland of promised huge profits.
Are those profits actually there?
There are small profits initially and then there is one big loss which wipes out the entire profit. This is followed by another big loss and that is when the doubts start creeping in.
Then the trader becomes either a reader or a blind follower of some tipster.
In the first case the focus shifts from trading to studying and losses are reduced for a while as trading is reduced. In the second case, the hit and miss strategy continues and unfortunately losses keep on adding.
There are very few traders who are able to stay profitable in day trading, but they are also not profitable on a daily basis.
It is not important to cash in profits every day. It is important to trade rightly.
Trading rightly means to work with a trading plan, use the stop loss to prevent big losses and leave the profit taking part in the markets.
But most traders are very keen to take a 1 Rupee profit when the market was giving them 5 Rupees and then think they are smart.
My Day Trades in August and September 2017:
I had stopped day trading about a year ago and was focused only on Options Trading.
I came across someone who trades exclusively on the day trade basis and trades more than 50 Futures contracts a day.
I am 2–3 contracts a day type trader.
I just can not do scalping (exiting with very small profit) Even if I intend to.
The policy of leaving the profits to the markets and waiting patiently when the trade is right has become so ingrained that it does not allow me to take small profits and close the trade.
With that also, I get a small profit at times because that was the only outcome possible based on the price movement.
Well, coming to the profitability,these were the trades in the month of August 2017:
In August 2017, day trades were done only for 3 days towards the end of the month on August 29, 30 and 31.
August 29:
Two contracts were traded. 1 each in Sun Pharma and Tata Motors. Both were short sales.
Profit in Sun Pharma was Rs. 5.75 ( lot size 800) And in Tata Motors it was Rs. 4.85 (lot size 1500)
2 trades. Both right. A good day.
August 30:
As previous day had gone well, the confidence level gets better. There is tendency to trade more. Even I am not an exception to this temptation of over trading.
Again, all trades are short sales.
Tata Motors Sold 379.25 Bought 382 (Loss, 2.75) (Lot 1500)
Tata Motors Sold 382.20 Bought 278.80 (+ 3.40) (Lot 1500)
Sun Pharma Sold 488.05 Bought 483.80 (+ 4.25) (Lot 800)
Infosys Sold 931.40 Bought 925.60 (+ 5.80) (Lot 500)
SBI Sold 278.80 Bought 276.65 (+ 2.15) (Lot 3000)
Reliance Infra Sold 507.65 Bought 508.00 (Loss, 0.35) (Lot 1300)
6 trades 2 Wrong 4 Right.
Got good profit in SBI trade. The loss in Reliance Infra was really small.
August 31:
This was the F&O expiry day in August.
The following trades were done:
Infosys Sold 922.80 Bought 914.75 (+ 8.05) (Lot 500)
Sun Pharma Sold 480.45 Bought 481.10 (- 0.65) (Lot 800)
SBI Sold 276.50 Bought 277. 65 ( - 1.15 ) (Lot 3000)
Tata Motors Sold 379.05 Bought 376.80 (+ 2.25) (Lot 1500)
Mahindra and Mahindra Sold 1355.50 Bought 1345.45 (+ 10.05) (Lot 500)
5 trades 2 Wrong 3 Right.
1 small loss, 1 normal loss, 3 normal profits.
This was the story of 3 days I did day trading in July.
The profit in 3 days was a little over Rs. 40000.
All the trades were done in Future Plus segment in icicidirect where the stop loss is entered while placing the initiating order itself.
Because of that the margin in various trades varied from just Rs. 6000 to Rs. 15000 only.
September 2017:
The profits in September were better than those in August.
I will not be sharing every trade as it would make the answer very long.
Trading in SBI Futures on 8 occasions resulted in a net profit of Rs. 34138.80.
Out of 8 trades, there was loss in 1 trade and profit in 7, though in 1 trade, profit has been just Rs. 0.20 per share.
To Summarize:
How much you earn daily is not important.
Trading has rightly been important.
Some trades will surely go wrong. It is essential to keep the losses small in these trades.
Do not keep profits, small.
Profit should be the reward for a right trade. By restricting the profit by having a target, we are acting against our own interest.
I am no expert.
But I do believe that simple trading with proper loss management works quite effectively.
Manage the wrong trades.
Let markets decide the profit in the right trades.
Thanks for reading.
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