Updated – 3rd Jan 2022
If you are always fascinated with the idea of trading in the stock market but you afraid of losing money because most of the people around you are naysayers of trading. You are looking at one side of the coin only.
I am going to show you the other side of the coin with 10 benefits of intraday trading in India.
Along with benefits, I am going to share some disadvantages of intraday trading as well so that you can make an informed choice by looking at both sides of the coin (not the one side only).
Without any further ado, let’s go through the benefits of intraday trading in India.
10 Benefits of Intraday Trading in India
#1. Extra Income
Extra income is the most obvious benefit of intraday trading. Intraday trading offers an opportunity to generate a supplementary income. People look for ways to use their ‘‘money to make more money’ for them and intraday trading is one of the most accessible options for doing that.
If you learn the ropes of trading well, it is very much possible to generate a consistent income by intraday trading.
#2. Increases Knowledge
If you start trading intraday, you will absolutely need to follow the news, global markets, macro events, and so on because each of these factors affect the market. You will also need to read about technical analysis if you want to learn to trade well.
So if you really take this up seriously, by default you will end up expanding your knowledge horizons.
#3. Easy Access to Markets
There are no restrictions for retail traders to trade in the Indian markets. All you need is open a trading account and add some funds. You can open a trading account nowadays from the comfort of your home within a few minutes.
Intraday trading is perhaps the easiest profession to enter, though sustaining in this profession will require you to work on your knowledge and skills.
#4. Advent of Discount Brokers
The advent of discount brokers like Zerodha, 5paisa, Upstox has made trading extremely affordable. Gone are the days when you had to call your trader to place trades and also pay heavy transaction fees.
Discount brokers provide user-friendly interfaces to trade along with many knowledge resources and tools like Sensibull, Streak, or Tickertape, to help you build trading strategies. This is one of the reasons why retail participation in the markets has sharply increased in the past few years.
#5. Can be Done From Home
All you need is a trading account with some added funds, a laptop and an internet connection to get started. You can do intraday trading from any corner of the world. Whether you already have a job or not, you can still pursue it.
It is not even a full-time job. You can choose to trade only on a few days. There are many people who leave their jobs and trade full-time after they have saved a decent amount of money. If a corporate job is not your thing, intraday trading is an option worth exploring.
#6. Endless Opportunities
There is no limit to the amount of money you can make in intraday trading. If you become really good at it, you will be able to generate stellar returns on your capital. There are so many examples of traders who started with a very small capital and built a fortune in the stock markets.
Ofcourse, only a small percentage of traders actually become successful. But if you have persistence and skill, you can make it big too.
#7. Minimal Capital Investment Required
If you do any business to generate income, you will likely require significant capital investment. For intraday trading, you can start with as little as INR 10,000. You have the flexibility to trade with whatever amount you are comfortable with. You can trade with just 1 unit of share as well!
You can start small and scale it up as per your comfort. This is one of the easiest thing to start with no capital-related barriers to entry.
#8. Lesser Chances of Unexpected Losses
Markets are very sensitive to macro events. Many times there can be some negative news after market hours causing the market to crash the next day. If you are holding a position during such time, you might incur heavy losses.
If you are trading intraday, you will enter and exit a trade on the same day. So the chances of incurring losses due to such unexpected events, are very low.
Standard brokers generally provide 5x-15x leverage for intraday trading depending on the scrip that you are trading. This means if you are trading with a capital of 1 lakh, you can take a position of value 5-15 lakh.
If you are a good trader, this leverage can be extremely advantageous as it gives you the capability to take big trades with minimal capital.
Also read – How to do forex trading
#10. Lower Transaction Costs
Brokerage and transaction costs are lower for intraday trading than trading by taking delivery.
Refer to the following image. Even if you trade with one of the most affordable brokers, you will have to pay approx. 3x the charges that you will pay for delivery vs. intraday.
Disadvantages of Intraday Trading
#1. Significant Investment of Time and Attention
You will have to constantly monitor your positions during the day when you are trading. If you have a full-time job that leaves little time or scope for you to watch your trades, you should avoid trading intraday.
#2. Can be Risky
Profit or loss are both part of trading. Most people start trading without sufficiently learning and training themselves for trading. This is why many people end up losing money and conclude that markets are rigged and trading is gambling. You need to be prepared for the fact that you will not always make money and there is an element of risk involved.
Trading can stoke up the gambling instinct in us. People tend to get greedy when they realize there is a possibility of making so much money in the market. It can be extremely addictive, so make sure that you are able to keep your greed in check if you are venturing into the world of trading.
#4. Early Loss Booking
Some of the biggest players in the markets are speculators. They move the market in unexpected ways and sometimes, retail traders get trapped.
Especially if you are a novice trader, you might get anxious on seeing your position in red and end up booking a loss. It is important to strike a fine balance between cutting your losses in time and not booking a loss too early. Learn more and hone your skills so that you are able to strike this balance in your trades.
Also read – Best indicators for intraday trading
If you want to make money and are willing to do the hard work in terms of reading, learning and practicing, intraday trading might just be the right thing for you.
Do not get scared by the naysayers of trading. Intraday trading can certainly be profitable if you do it right.
Otherwise, go for value investing (different from trading) if you want to grow your money gradually over time with fewer efforts.