Who makes money in Intraday Trading? It should be obvious right? It is the one who makes the trade. But is it really true? As per various studies over 95% of the Intraday traders actually lose money and there are only 5% lucky traders who actually take money from the market in Intraday Trading.
These numbers could be shocking for many of us because we often see many stockbroker companies sharing intraday targets, success stories, and other benefits of doing it. There are many internet gurus who share tricks and tips be become crorepati by Intraday Trading. So, why the actual success rate is not aligned with what we have been told by these so-called stock market experts?
When it comes to investing in the stock market – people usually think of it as a machine that can multiply their money in no time. It might not be the case for everyone but it’s true in most of the cases. This mindset doesn’t allow most of the newcomers (sometimes experienced) to use the stock market as an investment opportunity rather they use it as a gambling platform.
Before we go to the answer to the question mentioned in this article’s title, let’s see some of the benefits of Intraday Trading (but not limited to);
Top 5 Advantages of Intraday Trading
- Safety from the Overnight Risk: Share Market is driven by news and it could go either direction based on the type of news. Market may fall more than 5-10 % in case of really bad news and you may not even get a chance to sell your bought shares. Whereas in the case of Intraday Trade, you don’t keep the holding which prevents you from the potential loss due to any negative news. You can trade based on market sentiments once it opens.
- 8-10 times margin: Almost all the Stock Brokers offer margin for intraday trading and it is been sold as the beauty of intraday trading. Sometimes you can get margin up to 20 times based on broker and your trading history. It enables you to trade with 1 lakh money with 10 thousand in your hand and your profit/loss will be calculated based on the trading outcome with 1 lakh. This is another reason why most of the newcomers chose Intraday over delivery based trading (because they see only profit and neglect the other side of the coin).
- Less brokerage: Intraday brokerage changes are very less as compared to the delivery based trading. It is mostly near 0.1% and some brokers also offer fixed-rate/trade schemes. This allows traders to complete the trade-in narrow movement.
- No need to worry about Stock fundamentals: Intraday is a game of a single day and you don’t see company fundamentals rather you need to see price movement over the chart and take decisions. Traders trade based on today’s price movement and book profit/losses.
- Unlimited profit: Intraday Traders can make more trades in a single day than positional traders. If you are lucky, you can make a huge profit in a single day and celebrate. If you are super lucky then you can continue the momentum till several days. However, sometimes it increases the greed and makes trader impatience.
Well, there are benefits but doesn’t work for everyone. Sometimes these advantages work as disadvantages for the traders which eats up all their money eventually. More margin increases risks and could erase your month’s profit in a single day. Less brokerage can encourage you to make more trades even though you are losing and it could play with your emotions. Unlimited profit can cause restlessness in traders which is very dangerous in the stock market.
I am trying to say that, there are opportunities to make money from Intraday Trading but one has to emotionally strong, vigilant, and active to do so. Remember, the stock market doesn’t produce money – one person’s loss is another’s gain in the stock market. You need to beat others to be profitable and there can not be a 100% success rate. There are many big players (also known as Operators) who have internal news and the ability to drive stocks as per their wish which makes Intraday trading not everyone’s cup of tee.
I had started with Intraday when I came to know about the stock market. I had just started making money and thought to add some side money by Intraday Trading. Of course, I was encouraged by youtube videos and other articles which focus on advantages. It is very hard to see the negative side of the Intraday unless you have experience in this field. It all looks simple and super easy but it’s not. You can relate to what I’m trying to say here only if you have experience in intraday trading. Initially, I made some profits and followed many strategies and it failed at certain points, and in the end, I was in loss only. Probably I am just not good in intraday trading and don’t have what it takes to make you successful in this area. But, given the number i.e. 95% failure rate says, it is the case for most of us.
Then, Who Makes Consistent Profit in Intraday Trading?
But there is only one party which makes money all the times i.e. your Stock Broker. Either you make money or not, it doesn’t matter for the stockbrokers as they keep getting their cut on each of your trades. Between your fights with other traders to be profitable, stockbrokers smartly make money on your every trade.
Stockbroker provides you 10 or 20 times margin to trade, well-developed charts and indicators for intraday and also share the tips. This will help you to trade but doesn’t guarantee profit. They want you to make more and more trade because you are generating turnover and brokerage for them. The more you trade – the more they make money (not YOU). They run many paid news channels and so-called Intraday gurus or experts who encourage you to keep trading.
In reality, there is no strategy that can guarantee a profit in the stock market especially in Intraday trading. Intraday trading is not for everyone but if you are able to make consistent profit and have control over your emotion then it might be for you.
One of the dangerous disadvantages of Intraday trading is that, it could become an addiction and it is sometimes hard to avoid even if you are making big losses every day. In the search for consistent big profit, sometimes people make consistent huge losses.
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I am not an expert on Intraday trading, I wrote as per my experience and you might have a different opinion about it. I am not trying to scare you from it but would definitely like to warn you and wish you all the very best!