Loss in Intraday Trading

More on Intraday Trading

A successful stock market trader is always up for regular profits as well as loss in intraday trading.

Becoming a successful intraday trader is not an easy task. Definitely not!

Requires a lot of grit, patience, risk-taking ability and a lot other related characteristics. Otherwise, you will be invariably forced towards the direction of loss in intraday trading.

Although it seems simple to just click buy and sell buttons on the same day for a stock. If you are feeling bullish, then, you buy at a lower price first and sell later at a higher price.

And if you are feeling bearish, then, you can sell at a higher price first and then, buy at a lower price later.

Looks simple, right? Wrong!

It involves many aspects like a good selection of stocks, technical analysis, trading strategies, etc. and any mistake at any step of the whole process could lead to losses.

How To Avoid Loss in Intraday Trading?

In order to become a successful intraday trader, you need to learn technical analysis of stocks if you already have not done that.

It involves the reading of technical charts and interpretation of them, using different technical intraday indicators to identify where you can buy and sell in live markets.

The most commonly used technical indicators are RSI (relative strength index), MACD (moving average convergence and divergence), stochastic oscillator, Bollinger bands, moving averages, etc.

Different kinds of strategies can be made using these.

Technical charts are of different kinds like bar charts, line charts, candlestick charts, etc.

Candlesticks are the most commonly used charts for intraday traders. Other than these technical things, you need to learn about different trading platforms and their features for intraday trading.

They provide in-depth details about the trading of stocks like volumes of trading being done on a particular stock, the bid and ask spread, etc. Also, you should focus on stock selection.

Those stocks should be selected for intraday trading that do not have any liquidity issues and show good momentum during the day.

Also Read: Select Stocks For Intraday Trading

After this, if you are looking to avoid loss in intraday trading, one of the most important aspects of intraday trading is maintaining discipline at every step. Discipline means initiating a trade and exiting out of it at the precise moments decided by technical charts.

You should try to stay away from greed and hope in trading. It also means that you must always keep a stop loss for every trade that you make. The stop loss should be decided even before you initiate a trade and strictly maintain it to avoid huge losses.

Also, it is recommended to put only a small fixed percentage of your money in a single trade.

You must remember not to overtrade, that is, do not trade multiple sessions in a single trading day because keeping a constant focus on all those trades becomes very difficult and lead to losses ultimately.

If you are interested in learning the basic of technical analysis and about different technical indicators and their interpretation along with their use in intraday trading, you should consider taking an online stock market course in it.

You should also gather more information about trading platforms that can help you in trading. All the trading platforms have some pros and cons. There is a stock market education app which has a lot of useful content related to this topic.

This is called Stock Pathshala.

It has a specific course on technical analysis and technical indicators and oscillators. It also has detailed reviews about trading platforms and can help you choose the one that suits your requirements the best.

Income Tax on Intraday Trading Loss

Whether you make gains or incur losses in your stock market trades, all of that needs to go on record.

As far as filing your income tax is concerned, the profits from intraday trading are treated differently from the general capital gains you make from your stock market investments.

In fact, the technical provision of the gains or losses made from intraday trading is that those are treated as speculation gains or losses. This in simpler terms is seen as business income.

Where the capital gains from general stock market trading such as through delivery trades have a few concessions linked to them, gains from intraday trading is charged at a normal income tax rate. You MUST report the losses so that those can be set off against the profits you may have made from these speculations.

As these entries are reported as business entries, you are supposed to file ITR3.

Hope all these details would help you in becoming a better intraday trader while avoiding making a loss in intraday trading.

In case you are looking to get started with your intraday trading journey, let us assist you in taking the next steps ahead.

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