Definitely true, the capital you have plays a bigger role than u think.
Lets say i kept 10k only as capital, i will take lot of risky trades becoz i am okay even if it goes to zero. In that, one can earn good profit also (in some periods).
If my capital 1 lac, i will be very safe keeping stop losses at 1k or 2k loss points, and making a fool out of myself
If my capital 1 crore, again i will take blind trades even loss of 10-20k is nothing. Again profit will be more (in some periods) due to high risk.
Day trading has got a steep learning curve. Majority lose their capital during this period…and come and post like this on internet forums. Had they persevered, they would have crossed over to the successful group.
I have day traded on and off for around 3 years. Obviously, I have lost a lot of money.
From my experience, day trading in stocks (whether penny stocks or blue chips) is a very bad idea. There’s too much volatility. Also, the pressure of having to get a profit before 3.20 pm and the stress of whether to keep a tight or loose stop loss simply makes it next to impossible to day trade consistently. If the initial one or two trades go wrong, a lot of traders overtrade and escalate their losses. Also, it’s very difficult to keep a cool head and not go for reckless revenge trading.
If at all one has to day trade, it’s better to stick with the Nifty index. And here, one has to be extremely selective about entering a trade. Most of the times, the index won’t be in a trend. One has to figure out the conditions in which a strong movement is likely. One has to paper trade the index for at least 3 months to figure out the likely successful patterns and develop the mental aspects (patience, strength to have a loose stop loss, not getting rattled by false reversal signals or temporary movements that are against your trade direction).
I have stopped day trading because I am now focusing on building up my trading capital in a sober, steady way via short term equity delivery trades. I do paper trading on the index.
My 2 cents overall? Do only short term trades in a small select group of powerful bullish stocks , build up capital. While you do this, do day trading on paper. Note down your paper trading losses & profits and the % of wins. After few months of paper trading, you will get the answer as to whether you should do it. It’s very likely that you will have a good winning % in your short term trades, and you will not have the greed to go for day trading.
So you think markets aren’t rigged…hmmm…
Tatasteel posts spectacular numbers, a potentially winning acquisition AND suddenly profit taking happens and it happens to an extent that the scrib comes down by 80-90 points in few days.
BTW what is your source when you say institutional investors(traders) don’t day trade??
The problem is not about day trading or any time horizon trading, the problem is with the trader. Every one thinks they can start trading whenever they want, they just have to open an account and give the margin amount. But that’s not the case one have to give years of study behind it just like a Doctor, lawyers, a singer, a business man. Every thing has a cause and that cause will have its effect. Nothing is random, You have to put years of study to have an edge over market, something you understand best that others don’t . Then it doesn’t matter whether you trade 5min chart or daily chart you will gain.
Speculation is a profitable profession if you make it a business not Gambling instrument.
@Risk.Money agree and disagree with your statement. Agree if you are not able to take bigger losses if a position moves against you. Disagree because if you follow a system and ready to take bigger losses, the numbers don’t matter
@newguy intraday out and out bank nifty trades ( mostly shorts , mostly hedged ) … 12 : 4 profit to loss days
planning to drop all my other stock option trades and move the money for doing bank nifty intraday
Well, you are totally right about the psychological effect of thinking loss in absolute terms. With bigger account, you have to get into the habit of thinking in percentage terms rather than absolute which is easier said than done.
However, I was trying to refer a different issue which is more real than psychological. When you have more money to deploy, you miss on something called “Opportunity Cost”. Eg. If I have to take 1 Lot of NIFTY CE, I can do it in an instant for Rs. 20. However, if I have to buy 100 Lots I will have to do a trade off between -
(waiting for my order to get filled @ 20 which can lead to order not getting filled and missing on the move with smaller quantity )
or
(being aggressive which will invariably move the market and I may get it filled quickly but @Rs. 18 Avg. price.)
This is while entering itself. The same will be the case while exiting. So the profits overall will look much smaller and hence the returns possible in a small account with a given strategy won’t be possible to replicate in a big one due to “Opportunity Cost”.
Anyhow, if you are there long enough you will end up reinventing a lot of things as an when they reach the bracket … Its anyway fun. Cheers!
As @Kunal2015 mentioned above… you need practice before you see profit… put in 10000 hrs into reading charts and developing your rules… you may see profit after that only…
