How Much Money is Required for Intraday Trading

Traders across markets trade in intraday trading with the objective of earning profits in brief periods of time. But before you actually start trading, you might be puzzled by queries such as, exactly how much money is required for intraday trading?

If you, too, are getting ready to start your journey in the stock market as a day trader, then here is the complete information of the amount required and the profit you can increase by trading in different scrips with the same amount. 

So, without further delay, let’s dive into the detail and start day trading right away. 

Minimum Amount For Intraday Trading 

Intraday trading can be done across segments ranging from equity to currency to commodity trading. 

Depending upon the scrip you pick, you can further evaluate the amount of money needed to trade in the stock or other securities you want. 

Precisely speaking, there is no fixed amount to start investing in intraday trading and there is no minimum amount to invest in stock market in India either. The price of shares that you are interested in can vary from a rupee to thousands. Hence, you can buy shares of a particular scrip, depending on your budget.

So, let’s say there are two friends, Mr. A and Mr. B, who are willing to do the day trade in the stock of the banking sector with the small amount of ₹5000. 

On the basis of their self-analysis, they picked different stocks. 

Mr. A traded in the stock of ICICI Bank, the current price of which is ₹250 per share. 

On the other hand, Mr. B picked the stock of Suryoday Small Finance Bank available at ₹50 per share.

“Disclaimer: The mentioned stock is only for example purpose not for recommendation”

Since both traded with the same amount of ₹5000 so let’s find out the number of shares bought by each. 

Mr. A bought 20 shares. 

Mr. B bought 100 shares. 

Further, let’s say both the stocks showed growth of ₹5 per share when both the friends decided to quit.

Since Mr. A bought only 20 shares, the net profit would be equal to only ₹100. 

On the other side, Mr. B bought 100 shares, thus making a profit of ₹500. 

What did you understand from the above example?

Both the friends started trading with the same amount and closed their position by seeing the same growth in price. 

Still, one made a lesser profit than the other. 

This was because of the high price of the ICICI bank share compared to Suryoday Small Finance Bank. 

So what do you interpret?

Intraday trading does not demand a high amount of money. All it requires is the right strategy, proper research, and the perfect stock pick.

Further, buying the stocks in quantity increases the chance of earning profit in the day trade. 

In simple terms, Intraday trading demands that traders invest judiciously to ensure minimum losses. 

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How to Make a Profit in Intraday Trading?

Now let’s talk about the intraday trading profit.

It has been made quite clear that there are no restrictions on the amount of money you can invest in Intraday trading. But this doesn’t mean you should make investments that lead to no substantial profit. A trader cannot afford to be whimsical about their investments.

If you are an intraday trading beginner then it is advisable for a beginner to start intraday trading with smaller amounts like, say, 5000- 10000 rupees.

Although you can start with as small as ₹1 and exceed its value to as high as 1,00,000 or more in a day. 

This all depends upon the stock we are trading. It is good to trade in liquid stocks and shares that are volatile. 

Also, the choice of stocks for intraday trading depends upon the risk appetite of the trader. 

The disclaimer here is to trade with the money that you can afford to lose, as intraday trading is highly risky and can lead to huge losses if not done strategically. 

This discussion is incomplete without mentioning research and technical analysis of a stock using indicators like Moving Averages, Momentum Oscillators, and Bollinger Bands. Careful evaluation of these indicators helps in decision making and minimizing losses.

Seems confusing and challenging? This is where Angel One – the digital-first fintech broker can make your intraday trading hassle-free. Angel One provides you with simplified research analysis and personalized investment advisory through ARQ Prime, a rule-based advisory engine that simplifies investing for the young investor.

With Angel One, you can be more relaxed about which scrips to choose when to sell your shares or what to put as your Stop Loss limit. So, in addition to the online trading facility, Angel One’s innovative platforms will also help take your taking game to the next level.

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Intraday Trading Profit Example

Till now, we have talked about the amount and the potential money you can make with the trade. 

But every trade involves some amount of intraday trading charges and other fees that reduce the net profit. 

So again, how much profit can you make in intraday trading? 

Max, a beginner in Intraday, has decided to use ₹50000 for trading. He is going to buy 250 shares of Zomato, each priced at ₹200. 

“Disclaimer: The mentioned stock is only for example purpose not for recommendation”

Now Max made selling decisions of 100 shares at TIME A when the price hit 210.

So his Selling Transaction at Time A= 210 x 150= ₹31500.

But then Max got a little greedy and kept his other 100 shares just in the hope of a profit target shooting over 210. But, unfortunately, that didn’t happen.

Instead, the share went from 210 to 190, and Max was not confident of much recovery, so he sold the remaining 100 shares for 190 each at TIME B.

Selling Transaction at Time B= 190 x 100 = ₹19000.

Gross Profit = 31500+19000

        = ₹50,500

This is the profit he made with the trade, but again he needs to pay the brokerage. 

The brokerage paid to the broker plays a vital role in defining your intraday trading profit.

What if you have an account with the full-service stockbroker charging 0.05% per trade. 

Calculating the brokerage for the above case.

Brokerage for buying shares=0.05%* 50,000

      =₹25

Brokerage for selling 150 shares= 0.05%* 31500

    =₹15.75

Brokerage for selling 100 shares= 0.05%19000

        =₹9.5

Total brokerage= ₹(25+15.75+9.5)

              =₹69.25

Net profit= ₹(50,500-69.25)
=₹50,430

Now, this value is for smaller trades. 

What if you trade for an enormous value of, let say 5 lakhs or more. 

The brokerage increases, thus decreasing your overall profit. 

Right?

So how to reduce your brokerage and increase the intraday trading profit?

Simply, by choosing the stockbroker with more services and low brokerage like the Angel One, the technology-led stockbroker offers a flat ₹20 or 0.25% (whichever falls lower) for Intraday trading regardless of the volume of orders placed. Moreover, free equity deliveries are made available on Angel One which offers paperless and free account creation.

This example, though a very basic one, still explains that Intraday can increase your profit and helps you in making more money if executed strategically. 

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Conclusion

It won’t be an exaggeration to say that you have to be on your toes throughout if you wish to make a profit in Intraday trading. Intraday is as risky as it is profitable. Therefore you must carry out your capital investment decisions cautiously.

It is good to start small and trade only when you are sure about the analysis and results of the trade. 

So open a Demat account with Angel One and start trading strategically using the advisory call from ARQ Prime and other advanced user-friendly features provided by Angel One.

Get in touch with us and we will help you to open a Demat account online for FREE!

 

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