Why people lose money in intraday trading?

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Intraday trading is the buying and selling of the stock on the same day. When you trade intraday, the net position at the end of the day is zero, so there is no delivery. That is a unique feature of the rolling settlement system in India. It has opened up the floodgates for intraday trading as the trader can get leverage and also rapid churn. However, that is easier said than done and traders often complain that they lose money in intraday trading. These losses arise because traders do not maintain some basic ground rules. Here is why intraday traders end up losing money.

6 reasons why intraday traders could end up on the wrong side

1.       You trade like a cowboy and shoot from the hip. There is a popular misconception that trading intraday is about being macho and taking big risks. If you stake all your capital in a single trade, you are obviously not going to survive for too long. In reality, trading intraday is a lot more about discipline than even delivery buying. When you buy for delivery, you pay the amount and hence you can afford to wait. In contrast, intraday trading is leveraged and hence risk management becomes the key.

2.       Trading without capital loss limits is the second mistake most intraday traders make. Capital loss limits must be placed at various levels. You must clearly define how much you are willing to lose in a day, in a week and overall. For example, if your capital is Rs2 lakhs, you can set a 5% maximum loss target for a day and 25% as overall loss. At that point you must stop trading and revisit your strategy.

3.       Not being passionate about stop losses and profit targets is a common reason for losses. When you trade intraday, you need insurance both ways. You need protection from big losses and from losing profits. This can be best addressed through stop losses and profit targets. Intraday traders who do not set such limits at the time of order placement are more likely to lose money.

4.       Not being the decision maker for all your trades is a common reason for losses. What does this mean? Quite often, traders rely on tips and ideas from the broking fraternity for trading. That does not work in the case of intraday trading. You need to learn how to interpret charts and news flow yourself. There is no rocket science in reading charts and you can do that with a little bit of extra effort. Trading intraday is extremely personalized and off-the-shelf solutions are bound to disappoint.

5.       Trying to outsmart the market is a cardinal blunder that a lot of intraday traders commit. As an intraday trader, you are different from a long term investor. A long term investor with a Buffettian tilt can afford to take contrarian calls on the market. As an intraday trader, you are trading within the limited window of 6 hours. The best way is to read the market trend and play by the trend. Trend is your friend as an intraday trader. In the long run, the market will always outsmart you!

6.       Not adapting to the changing environment is a common reason why intraday trades fail. We call it the giraffe syndrome to represent the way its neck adapted to vanishing grasslands. Market undertones keep shifting continuously. Volatility could increase, midcaps could become more attractive, sectors could go out of favour and all these have an impact on your intraday trading strategy. It depends on how best you adapt!

IPO Next Week

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After closure of bidding for four IPOs, four more IPOs are going to open next week. Out of these four, two IPOs — car trade IPO & nuvoco vistas IPO will open on 9th august 2021 while two IPOs aptus value housing & chemplast sanmar will open for subscription on 10th august 2021.
So, next week is going to become a busy week for IPO bidders as roelx rings is likely to get listed at Indian bourses on Monday. Allotment of shares is also expected next week for the four IPOs that closed on Friday.  Grey market has already giving signals about its mood in regard to these IPOs. The grey market premium for car trade IPO and Nauvoo vistas IPO is available now. Car trade IPO GMP today is ₹450 while Nauvoo vistas IPO GMP today is ₹40.

SUBSCRIPTION DETAILS
Car trade IPO and nuvoco vistas IPO is going to open for subscription on 9th august 2021 and it will remain open for subscription till 11th august 2021. Aptus value housing and chemplast sanmar IPOs will open on 10th august and it will remain open for subscription till 12th august 2021.

ISSUE PRICE
Promoters of car trade tech have fixed price of their public issue at ₹1585 to ₹1618 while nuvoco vistas IPO price band is ₹560 to ₹570. Aptus value housing IPO price is ₹346 to ₹353 while chemplast sanmar IPO price band is ₹530 to ₹541.

ALLOTMENT DATE
Finalization of share allotment of car trade tech IPO and Nauvoo vistas IPO is likely to take place on 17th august 2021 while allotment date for aptus value housing and chemplast sanmar IPOs is likely to happen on 18th august 2021.

IPOs LISTING
All four IPOs will be listed at both nse and bse. Tentative date for car trade IPO and nuvoco vistas IPO listing is 23rd august 2021 while 24th august 2021 is the probable listing date for aptus value housing and chemplast sanmar IPOs.

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We  suggest buy call in Coal India NSE 0.31 % with a target price of Rs 234. The current market price of Coal India Ltd. is Rs 145.65. Time period expected is one year when Coal India price can reach defined target.Coal India Ltd., incorporated in the year 1973, is a Large Cap company (having a market cap of Rs 90314.78 Crore) operating in Mining sector. For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 27974.12 Crore, up 14.96 % from last quarter Total Income of Rs 24334.62 Crore and down -5.11 % from last year same quarter Total Income of Rs 29481.41 Crore. Company reported net profit after tax of Rs 4591.81 Crore in latest quarter.
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Tomorrow IT major infosys will release its earnings for the first quarter ended June 2021.We expect the IT firm to report strong earnings growth during the quarter and to revise full-year revenue growth forecast upward. We forecast sequential revenue growth rate of 4.5 % in constant currency driven by higher billing days and seasonal strength, the ramp-up of large deals, and higher spending across all major verticals. Infosys to raise FY22 revenue growth guidance to 13-15 % in constant currency terms from 12 % earlier, while we expect the same to be revised to 14% Both the brokerage feels the company will maintain EBIT margin growth guidance at 22-24%."Infosys is strongly positioned with FY21 deal total contract value at $14.1 billion with 66 % net new deals. We expect strong pick up in TCV & strong commentary for the deal pipeline.
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RULES FOR SUCCESSFUL STOCK MARKET TRADING

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If you're new to trading, you probably just want to know how to hurry up and make money.Each of the rules below is important, but when they work together the effects are strong. Keeping them in mind can greatly increase your odds of succeeding in the markets.

Always Use a Trading Plan-A trading plan is a written set of rules that specifies a trader's entry, exit, and money management criteria for every purchase.With today's technology, it is easy to test a trading idea before risking real money.

Treat Trading Like a Business-To be successful, you must approach trading as a full- or part-time business, not as a hobby or a job.If it's approached as a hobby, there is no real commitment to learning. If it's a job, it can be frustrating because there is no regular paycheck.Trading is a business and incurs expenses, losses, taxes, uncertainty, stress, and risk. As a trader, you are essentially a small business owner and you must research and strategize to maximize your business's potential.

Protect Your Trading Capital-Saving enough money to fund a trading account takes a great deal of time and effort. It can be even more difficult if you have to do it twice.It is important to note that protecting your trading capital is not synonymous with never experiencing a losing trade. All traders have losing trades. Protecting capital entails not taking unnecessary risks and doing everything you can to preserve your trading business.

Become a Student of the Markets-Think of it as continuing education. Traders need to remain focused on learning more each day. It is important to remember that understanding the markets, and all of their intricacies, is an ongoing, lifelong process.Hard research allows traders to understand the facts, like what the different economic reports mean. Focus and observation allow traders to sharpen their instincts and learn the nuances.

Risk Only What You Can Afford to Lose-Before you start using real cash, make sure that all of the money in that trading account is truly expendable. If it's not, the trader should keep saving until it is.Money in a trading account should not be allocated for the kids' college tuition or paying the mortgage. Traders must never allow themselves to think they are simply borrowing money from these other important obligations.Losing money is traumatic enough. It is even more so if it is capital that should have never been risked in the first place.

Develop a Methodology Based on Facts-Taking the time to develop a sound trading methodology is worth the effort. It may be tempting to believe in the "so easy it's like printing money" trading scams that are prevalent on the internet. But facts, not emotions or hope, should be the inspiration behind developing a trading plan.Traders who are not in a hurry to learn typically have an easier time sifting through all of the information available on the internet. Consider this: if you were to start a new career, more than likely you would need to study at a college or university for at least a year or two before you were qualified to even apply for a position in the new field. Learning how to trade demands at least the same amount of time and fact-driven research and study.

Always Use a Stop Loss-A Stop Loss is a predetermined amount of risk that a trader is willing to accept with each trade. The stop loss can be a dollar amount or percentage, but either way, it limits the trader's exposure during a trade. Using a stop loss can take some of the stress out of trading since we know that we will only lose X amount on any given trade.Not having a stop loss is bad practice, even if it leads to a winning trade. Exiting with a stop loss, and therefore having a losing trade, is still good trading if it falls within the trading plan's rules.The ideal is to exit all trades with a profit, but that is not realistic. Using a protective stop loss helps ensure that losses and risks are limited.

Know When to Stop Trading-There are two reasons to stop trading: an ineffective trading plan, and an ineffective trader.An ineffective trading plan shows much greater losses than were anticipated in historical testing. That happens. Markets may have changed, or volatility may have lessened. For whatever reason, the trading plan simply is not performing as expected.Stay unemotional and businesslike. It's time to reevaluate the trading plan and make a few changes or to start over with a new trading plan.An unsuccessful trading plan is a problem that needs to be solved. It is not necessarily the end of the trading business.
An ineffective trader is one who makes a trading plan but is unable to follow it. External stress, poor habits, and lack of physical activity can all contribute to this problem. A trader who is not in peak condition for trading should consider taking a break. After any difficulties and challenges have been dealt with, the trader can return to business.

Keep Trading in Perspective-Stay focused on the big picture when trading. A losing trade should not surprise us; It's a part of trading. A winning trade is just one step along the path to a profitable business. It is the cumulative profits that make a difference.Once a trader accepts wins and losses as part of the business, emotions will have less of an effect on trading performance. That is not to say that we cannot be excited about a particularly fruitful trade, but we must keep in mind that a losing trade is never far off.

Conclusion-Understanding the importance of each of these trading rules, and how they work together, can help a trader establish a viable trading business. Trading is hard work, and traders who have the discipline and patience to follow these rules can increase their odds of success in a very competitive arena.
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WHAT IS CALL OPTION & PUT OPTION ?

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OPTION:- Call option and Put option are the two main types of options available in the derivatives market. A Call option is used when you expect the prices to increase/rise. A Put option is used when you expect the prices to decrease/fall. Options are derivative contracts which have no value of their own and derive their value from the value of the underlying asset. The underlying asset can be shares, currencies, commodities etc. An options contract gives the buyer the right but not the obligation to buy or sell the underlying asset within a specified date (known as the expiration date) and at a specific price (known as the strike price). In options, the buyer of the option has the right of exercising the option or cancelling it. The loss for the option buyer is limited to the premium paid. 

TYPE OF OPTION
1- CALL OPTION
2- PUT OPTION

CALL OPTION-A call option gives the buyer the right but not the obligation to buy the underlying asset at a particular price (strike price) on or before the expiration date. 

PUT OPTION - A put option gives the buyer the right but not the obligation to sell the underlying asset at a particular price (strike price) on or before the expiration date. 

Basic terms relating to call and put options👇

1.       Strike Price: Strike price is the price at which buyers and sellers decide to buy or sell the underlying asset after a specified period. 

2.   Spot Price: Spot price is the current price of the underlying asset in the stock market.  

3.   Option Expiry: Options contracts expire on the last Thursday of the month. 

4.   Option Premium: Option premium is the non-refundable amount paid upfront by the option buyer to the option seller (also known as option writer). 

5.   Settlement: Option contracts are cash settled in India.

What is the Difference Between Call Option & Put Option?

Parameters Call Option Put Option Meaning Call option gives the buyer the right but not the obligation to Buy Put option gives the buyer the right but not the obligation to sell Investor’s expectation A call option buyer believes the stock prices will rise / increase A put option buyer believes the stock prices will fall / decrease Gains  For a call option buyer, the gains are unlimited.  For a put option buyer, the gains are limited as the stock prices will not become zero.  Loss For a call option buyer, the loss is limited to the premium paid.  For a put option seller,  maximum loss is strike price minus premium Reaction to dividend Calls lose value as the dividend date nears.  Puts increase in value close to the dividend dates.

INTRADAY TRADING STRATEGIES 👍👍👍

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Intraday trading involves taking long or short positions in securities and squaring off the positions before the end of the trading day. The tools and techniques used for intraday trading are fundamentally different from those used for long-term investing. Intraday trading involves taking long or short positions in securities and squaring off the positions before the end of the trading day. Intraday trading requires two parties for a trade, one to sell and the other to buy the stocks. The market is very volatile, and profits do not depend only on the market going up. You can make a profit even when the market is moving downtrend. A day trader can make money irrespective of whether the market is going up or down.In this article, we will discuss some of the disciplines that a day trader should get used to before taking up intraday trading.

👉  Trade with money you can afford to lose: It's vital to set aside a certain amount of money for day trading. But it is important for a trader to first focus on how much loss he is willing to take overall, and on a per trade basis.

👉  Follow strict stop loss: One of the biggest traits that set apart winning and losing traders is discipline. Make it a habit to use ‘stop-loss’. A stop loss order is an automatic order to buy or sell a stock when its price reaches a specified  ..
👉 Entry and exit strategies: Sometimes a trader might get fascinated by a particular stock, but we should not forget that one has rely on specific strategies to make a profit from it. One should stick to certain set guidelines religiously in intraday trading.

👉  Choose liquid stocks: Liquid stocks tend to have high volumes and this can allows for purchase or sale of larger quantities without significantly impacting the price. This can help grab any potential gain that may  arise from large price movements on any given day. Since intraday trading strategies are dependent on speed and precise timing, a high degree of volume makes it easier to get into and out of a trade.
👉  Keep business and emotions separate: The intraday market is very volatile, and we may experience great profits or losses within a short span of time. Hence, it is important to have tight controls over one’s emotions. One should not get too excited by the profits he makes, and not get disheartened by losses. A day trader has to have a very alert mind to be able take quick decisions. For this, one has to have a mind free of emotions.

👉 Do not over trade: This is the golden rule of intraday trading. The share market may not always trend, or trend in a predictable manner. Trading only in a handful of stocks at a time is the best way to go about with your day trading. If we continue to ignore the market response, that can be a sure-shot recipe for losing your money.
These rules are really important for intraday margin trading. It is essentially an activity that calls for discipline and risk management and can only be perfected over time. It would not be wrong if we say that intraday trading requires bringing a certain of uniformity to the trader’s lives.
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BENEFITS OF TRADING IN STOCK FUTURES

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A futures contract is a contract or agreement between two parties to conduct a transaction at a predetermined locked down price at some point in the future. It is essentially a bet on the prospects of a stock, one of the multiple financial trades you can perform. Two parties take opposing stances, with one agreeing to buy shares and the other agreeing to sell them at a certain price sometime later, irrespective of the prevailing market price then.To illustrate, consider two trading entities A and B. A holds the view that the value of a stock would rise from its present value in the future while B believes the opposite. A and B enter into a contract with A agreeing to buy shares of the stock from B at the present price sometime in the future. If A’s bet comes true, that is, if stock value rises, A can get shares of the stock at a discounted price from B. Conversely, if the share value drops, B can sell shares to A at a premium, that is, at a value greater than the market price.

There are 2 primary benefits to future trading - the leverage you receive, and the risk mitigation it offers.

Margins and leverage

Unlike buying equity, one needn't pay in full to buy futures. One need to only pay a percentage of the total contract value to buy or sell in futures. This percentage is called margin and varies between different stock futures. Thus you could buy/sell a lot more shares of futures than equity with a certain amount of money. For example, if the margin is fixed at 20% for futures in a stock, one could buy/sell 5x times more shares in futures than in equity. This ratio is called leverage. Thus, with 20% margin, the leverage is 5. Leverage is a double-edged sword. It multiplies profits manifold but also multiplies losses.
If futures in a stock has a leverage of 5, it means that profits would be five times than that of equity profits. If the equity returns a profit of 20%, the futures offer a return of 100% (Futures profit percentage = Equity profit percentage*Leverage). This is possible because only a fraction of the price is paid to buy futures . But losses would be equally magnified too. A 20% loss in equity would cause 100% loss in futures having a leverage of five.

Hedging against risks

Futures can be used to mitigate or hedge against systemic risks to investment in a single stock or a portfolio of stocks. For single stocks, hedging can be done easily by selling futures at a higher price than the price at which equity was bought. The number of futures sold must be equal to the number of equity shares held by one. Thus, if prices fall, the profit from the selling order in stock futures would offset fall in equity value and vice versa. A fixed return is guaranteed and market fluctuations don't affect the returns. Futures can also be used to hedge against risks to investment in a portfolio of stocks.

POINTS TO REMEMBER

·      With Futures, you do not have to worry about closing your position at the end of the day, while with Cash Trading you need to be mindful of closing intraday positions if you are taking margin.

·         Nifty and certain Equity Futures are usually very liquid; therefore, through liquidity there is a a good chance that the trader will capture the price he seeks.

·         Futures is 0.01%, while intraday Cash Trading charges 0.025% on sell side trading and 0.1% on both buy and sell side trading for delivery transactions.