Intraday Trading Profit

Intraday Trading profit, sounds fascinating right? The word profit has that charm. This is the reason why a lot of traders are attracted to intraday trading. However, beginner traders often question this idea, considering the intraday trading risks involved. So why not unravel the truth behind it together today?  

Before diving straight into the profitability of intraday trading, let us quickly sum up what it actually means. If we talk about intraday trading meaning, then it is the buying and selling of shares (or FnO contracts) on the same day. 

It could be buying first and selling later or the other way around (i.e. shorting).

So if we actually talk about it, the profits are made in a single day.

No matter how risky intraday trading might sound, it is actually a great way of making profits. Let us now shed some light on Intraday trading profits and if it is actually worth the hype. 

So, let’s begin!

How Much Profit in Intraday Trading? 

Intraday trading is profitable when done with the right strategies and mindset. But how much profit in intraday trading can you expect? 

So the intraday trading profit percentage largely varies on a lot of factors. So let us first understand how to calculate the intraday trading profit percentage in the very first place, with the help of an example. 

If Anil, who is an intraday trader, purchases 1000 stocks of an XYZ company at 10 AM in the morning at ₹100/stock. At 11:45, the prices of the stocks reach ₹105/ stock, and Anil sells off all the stocks.

The overall percentage of the trade can be calculated as Profit/original amount invested= ((105-100) * 1000)/(1000 * 100) i.e. (5000/1,00,000)= 5%

So, in this case, the profit percentage per share will be 5%. 

You can earn a profit of 2%-5% to even as good as 10%-20% in a single day (although that happens rarely). The factors that can define the profit percentage of an intraday trading session are as follows.

If some sudden news about the company comes into the market, there are higher chances of fluctuation in stock prices. In these cases, the intraday trader is generally capable of making good profits.

Having said that, this intraday trading profit can be made either way i.e. market being bullish or bearing.

If the prices go unexpectedly high, then a trader can earn a good return by taking a long position. But in the case of the market moving in the bearish trend, a trader can make by short-selling the stock (and of course by short covering it later). 

There are other ways where intraday trading profit can be made:

• When a company is getting listed in the stock market with the help of an IPO, there are listing gains as well. This is also a good opportunity for intraday trading to make good profits as the prices usually see an uptrend on a listing day.
• The announcements of quarterly reports also play an essential role for intraday traders. With the announcement of quarterly reports also, the stock prices see a good fluctuation in the market. 
• Bulk deals and FII data also affect the intraday trading profits of intraday trading. 

So, intraday trading is profitable, and the profit that you can generate from a particular trade depends on your selection of the stock, the market conditions, the kind of trading app you are using and the right strategies. 

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Intraday Trading Profit Calculator 

Now that we know that you can earn a good profit with intraday trading, it is also essential that you know how to calculate the intraday profit. 

So whenever you execute an intraday trade, you are charged certain charges. These charges include:

• Intraday trading charges 
• Transaction Charges 
• STT charges 
• Stamp duty charges 
• GST 
• SEBI charges 

So, when you are calculating your intraday profit, you should keep in mind that these charges will also be deducted. The brokerage on intraday trading is charged on both sides, that is, the buy and sell sides. 

Let us understand this with the help of an example.

Zeeshan has a Demat account with Angel One. he purchases 10 shares of an ABC company for ₹2000 each. Towards the end of the trading session, the prices of the stock went up, and Zeeshan sold all 10 stocks for ₹2200 each.  

The total profit that he made is ₹(10 * 200) i.e.₹2000, but as he will also have to pay the brokerage and other charges, the profit will come down a little. 

So how can you maintain a good profit even after paying the brokerage charges?

This can be done by choosing the right stockbroker.

Now beginners often get confused when it comes to picking the right broker. There is a list of full-service brokers offering research tips but at the same time charging high for trading. 

On the other hand, there are discount brokers offering flat brokerage fees but no research which often leads to losses. 

Isn’t it a confusing situation?

To simplify this, Angel One, the FinTech broker has come up with their hybrid broker model where the trader can reap the benefit of free research tips and trading at flat brokerage fees. 

Angel One introduces the iTrade Prime plan, according to which it charges ₹20 or 0.25% of the turnover for intraday trading. 

So, in the above case where Anil did the trading of total turnover value, ₹2,05,000 have to pay brokerage of ₹20 to execute the trade with Angel One. 

Traders can often get confused in the calculation of the brokerage charges. The lack of the same often keeps them away from discovering accurate intraday trading profit. 

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Intraday Profit Settlement 

Intraday trading can be a profitable and permanent income source for traders. Now suppose that you gain significant profits from intraday trading, but the question is, when will this be credited? 

Intraday profit settlement is done after the market session ends on the next working day of you executing the trade.

So, if you made profits today, you will not be able to use it for further trading on the same day. You will have to wait till tomorrow’s end of the market session. 

Ramesh bought 100 shares of ₹100 each and then sold them for ₹120 each, thus making a profit of ₹2000. There can be 3 conditions now, 

• Trading on a weekday– If Ramesh executed the trade on Monday, then his intraday profits will be unblocked or settled after Tuesday’s market session. (After 3:30 pm on Tuesday)
• Trading on the weekend- If Ramesh executes the trade on Friday, then the markets don’t open for the next two days. So, in this case, the profits will settle on Monday, after the market session. 
• Trading on a holiday- In this case, the profits will be settled at the end of the next working day of the market. 

In general, now, the intraday trading profits are credited to your trading account according to the T+1 rule. This is in accordance with the SEBI’s new guidelines.

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Income Tax on Intraday Trading Profit in India 

Income tax filing is another concern that traders might have, and the general question remains, is intraday trading taxable? Yes, all the profits that you make from intraday trades are taxed. 

All your intraday trading profits are considered business income and not your capital gain. This means that this will be included in your salary, business income, or any other income that you generate. 

The traders are taxed according to the speculative business income and non-speculative business income. The speculative income is the one that is generated by the trades as it is not held, and all the f&o intraday trades across segments are treated as non-speculative income. 

So, these profits are added to the overall income and then taxed according to the slab that you fall into. 

The income tax slabs for individuals below 60 years are given in the table below. 

Let us understand this with the help of an example. These are the slabs, and according to this, your intraday profits are usually taxed.

Rajesh is 35 years old, and an intraday trader and has an annual income of 12 lakhs. He generates ₹2,00,000 from intraday trading and ₹1 lakh from the f&o segment. Apart from this, he has a rental income of ₹2,00,000.

12,00,000(salary) + 2,00,000(intraday trading) + 1,00,000(f&o) + 2,00,000(rental income) = ₹17,00,000.

So he will be taxed on?

Let us see how he will be taxed. So, according to the slab, the income tax will be as follows.

 

So the total tax, in this case, will be ₹2,10,000. 

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Is Intraday Trading Profitable? 

Yes, intraday trading is profitable. However, there are definitely some conditions that a trader should note when getting started with intraday trading.

First, there are a lot of people who often get scared because of the risks involved with intraday trading. While the fear is not wrong, it is also important to note that there can be significant profits as well. 

Let us now look at some points that you can take to make your intraday trading profitable. 

• Always understand your goals. It is essential that you keep an eye on your need and don’t get too greedy when you are getting into intraday trading. 
• It is vital to use the right intraday trading strategies so that you can optimize your risks and maximize your profits. 
• Understand your risk appetite and then get involved. 
• Maintain a healthy risk-to-reward ratio. 

If you keep these points in mind, intraday trading can become a great source of generating profits. 

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How to make a Profit from Intraday Trading?

Now it is not wrong to say that intraday trading is profitable. So, how to make Intraday Trading Profit at all?

The first mantra is to learn stock market. 

Once you learn the basics, you can use that learning in finding the right stocks.

Further to trade at the right price, do a proper and in-depth technical analysis of stocks. To give you a little detail on this here is the detail.

Intraday Trading Books

Now, there is no trader who has not to suffer a loss in day trading. No doubt, it is the riskiest and reward-generating trade in the Indian stock market, but still, it can be said that there are traders who make a comparatively lesser loss.

Do you know why? Because they give proper time to their learning. One can learn intraday trading through a different medium and one of the best and most traditional ways are books.

Referring to the right book as per your trading understanding, you can increase the probability of high profitable trades in the market.

To give you some recommendations, here are the best picks in the table below:

 

Technical Analysis of a Stock

Technical analysis of stocks helps you in understanding the trend, volatility, volume, and momentum of a stock price. These factors can help you to time the market, where you can make an entry and exit at the right time.

Research for the right stock and give proper time to do technical analysis. For this, one must know which chart to look at and of course the usage of different technical indicators.

With the above books you can gain an understanding but to gain experience it is important for you to practice those skills in the live market.

Technical analysis also helps you in identifying potential support and resistance level that makes it easier for a trader to set a target price and stop loss.

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Conclusion 

Intraday trading is an excellent way of earning great profits if you look into it carefully. You can easily start trading and reaping the benefits. The gains you earn will be credited in T+1 days, and then you can use this to further trade. 

If you are also looking to gain significant profits from intraday trading, open your Demat account today!

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Experience the trade with the renowned stockbroker by opening a demat account online for FREE!

 

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