Intraday Trading

Ans. The profits from day trading are treated as business income. The gains are added to your annual income and taxed as per the tax slabs applicable. The tax treatment of profits from long term equity shares is different from trading profits. The capital gains tax is applicable for equity shares based on the time period for which shares were held. Trading income is categorised as speculative business income and added to annual income for taxation. Equity trades that are delivery based are categorised as non- speculative business income. The profit from non speculative securities trading is also added to annual income for taxation. e.g your annual salary is Rs 8,00,000 Annual Intraday trading profits: Rs 1,00,000 Interest Income Rs 1,50,000 Currency trading profits: Rs 50,000 Options Trading profit: Rs 1,00,000 Equity Capital Gains: Rs 1,00,000 Total taxable income : Rs 12,00,000 Capital Gains Tax on Rs 1,00,000 as per eligibility in STCG or LTCG.

Ans: Stock trading has gained popularity in recent times with online trading apps, easy & paperless account opening process, access to information and research and attractive brokerage offers. Intraday traders look at profit potential in a short time, with less capital and effort. However, you must consider below points with equity trading: Risk appetite: Intraday trading relies on market movements on a single day and can be prone to unexpected events, abrupt price fluctuations and sentiment based volatility. As a trader you must have a higher risk appetite to absorb sharp movements and even losses. Price Target & Stop Loss: Most trading apps allow you to place profit targets on your stock as well as a stop loss order. With limits placed on upside as well as downward price movement, you need not check the stock price every minute. The moment stock reaches target level, stock is automatically sold. Similarly if the price is falling, your loss is limited by way of a limit place on loss. Trading allocation: As a beginner, it is pertinent to allocate a fixed amount from your overall portfolio for Intraday trading. This will ensure you do not dip into all your savings for investments with higher risks. A balanced asset allocation will give you peace of mind and better returns from different instruments with different risk factors Research: As an equity trader, thorough research into a stock’s fundamentals, market movements, charts, patterns and models is essential. The better armed you are with market information, the better will be your trading skill and knowledge. Available Time: Intraday trading involves being present during the market hours and track the movement of selected stock closely. A trader must have a couple of hours available for trading during the market hours to trade actively.

Ans: For day trading with margin facility, a Margins Penalty is levied for not keeping sufficient margin in the trading account. A trader is required to always have enough margin in their trading account. In case of any shortfall, funds must be added without delay. Margin shortfall Penalty on shortfall (< ₹1 lakh) And (< 10% of applicable margin) 0.5% (>= ₹1 lakh) Or (>= 10% of applicable margin) 1.0% A 5% penalty is applicable for any margin shortfall for more than 3 consecutive days. A 5% penalty for more than 5 incidents of shortfall in a calendar month.

Ans: At Rupeezy, our Intraday Trading charges are designed to offer you the best value in the market: For equity intraday trading, we charge 0.03% of the transaction amount or a flat fee of Rs. 20 per order, whichever is lower. Equity Futures cost Rs. 20 per order. Currency Futures (CF) trading also has a flat fee of Rs. 20 per order. Equity Options are charged at Rs. 20 per lot.

Ans: You can place Intraday trades between 9:15 am and 3:15 om. The trade must be squared off before the market closes or it will result in stock delivery in your demat account. However markets are volatile upon opening, you can wait one hour to begin trading as price patterns emerge.

Ans: Day trading is popular for making quick profits without a large upfront corpus, develop equity investing skills and trade at low costs. High Liquidity: In Intraday trading the positions are squared off the same day, hence your funds are not locked for long term. You have high liquidity in case of any cash need. Low Cost: Intraday trading charges are much lower compared to delivery trades as there is no delivery of shares to demat. Capped Risk: Intraday trades are squared off on the same day and traders’ losses are capped to the price fluctuation on the particular day whereas with regular trading, shares are held for longer periods and prone to higher price volatility and unforeseen adverse market conditions. Profitability: Since the capital is churned more often in Intraday trading, the probability of earning higher returns is more in Intraday trades. Even in bearish markets, investors can gain through short selling.

Ans: For trading intraday in equities, stock selection is vital. Select stocks with liquidity for easy buying and selling. The volume of shares traded indicates its liquidity. Stocks with some price movement and volatility give better chances of arbitrage for traders.

Ans: Traders use charts and patterns to gauge market and stock price directions. There are different indicators used as a tool that use data to decide a trading strategy and maximise profits: Moving Averages: Moving average chart joins the average closing price of a stock on a graph for a long period of time. This indicator makes it easy to understand the price movement trend over a period of time in a stock. Bollinger Bands: Bollinger Band is a variant of Moving Average indicator. It charts three lines for a stock; the average closing price along with upper and lower limit. It indicates the range of movement in price in both directions from the average and helps understand how volatile a stock is. Momentum Oscillators: At times it is not clear if there is bearish or bullish trend. Momentum oscillator is charted in 0 to 100 range to study if a stock is beginning a new trend. Relative Strength Index (RSI): RSI is plotted as a range between 0 to 100 in an index form. The index moves with price rise or fall. Once an index reaches a certain level, traders can make buy or sell decisions.