Day trader income india
How to take daily profit in trading? Welcome to Financial House The below strategy and technique will provide Rs profit on daily basis. New comers to share market should understand the markets day trader income india learn paper trading practice before moving to day trader income india trading because day trading is very risky for new day trader income india. How much profit the trader can make in a month? Basically it has been observed that many times traders lose money due lack of knowledge.
If you are expecting Rs. So do day trader income india think it is convincing you? Your intention is to earn money in a day, so just concentrate on small profits and do multiple trades instead of waiting to get huge profit in just single trade.
Markets are always right so to avoid the further risk it is always recommended that day traders should keep booking profit wherever applicable. The current intraday brokerage offered by us Rs 20 for buying and Rs 20 for selling.
For opening the account you can visit at Demat account opening page. Example - How to trade and earn profit on daily basis Suppose if trader bought Buy Tata motors at Rs. So if you have Rs. Margin amount is amount given by your broker for day trading.
This amount varies from broker to broker but it is generally 4 to 5 times and it is also based on stock you choose for trading. Now you sold Tata motors at Rs. Here you can see trader took profit of Rs 1. Your gross profit is Rs Your total turnover is calculated by adding the buying amount and selling amount.
So you net profit comes to Rs Rs Suppose if you do 2 trades in a day then your net profit will be Rs Conclusion - Taking only Rs 1. How to increase profits? In above example we have day trader income india only shares and If you increase the number of shares then your profit will increase accordingly. Try to take small profits because there are lots of changes for small day trader income india fluctuations. So if you trader shares and your profit will be doubled per day and that comes to Rs In a month there are 22 trading days.
We also believe that it is not possible to earn profit on daily basis and day trader income india some losses would happen due to market fluctuations. So believe in small and end up the day and your day trader income india with big profits. Important note - 1 Only profits are not possible in day trading, losses are also part of day trading. If your trade goes wrong then trader has to accept losses and come out of trade.
Margin amount varies from day trader income india to broker but generally broker provides 4 to 5 times margin amount. Big Disadvantage of Margin amount - If you use the margin amount then you have to square off your trades before market closes whether day trader income india are in profit or loss.
So if margin amount is not used and if your trade goes wrong then you can take delivery of those stocks and sell later whenever price goes up. New comers to day trading New comes to share market can start trading by small amount like Rs or 10, and get confidence of earning and once the trader makes consistent profits then he can plan to increase the amount. So believe in small and end up the month with big profits.
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You can classify yourself as an Investor if you hold equity investments for more than 1 year and show income as long term capital gain LTCG. You can also consider yourself an investor and gains as short day trader income india capital gains STCG if your holding period is more than 1 day and less than 1 year. In this chapter we will day trader income india on all aspects of taxation when trading is declared as a business income, which can be categorized either as:.
Unlike capital gains there is no fixed taxation rate when you have a business income. Speculative and non-speculative business income has to be added to all your other income salary, other business income, bank interest, rental income, and othersand taxes paid according to the tax slab you fall in.
You can refer to chapter 1 for tax slabs as applicable for FY In order to find out my tax liability, I need to calculate my total income by day trader income india up salary, and all business income speculative day trader income india non-speculative. The reason capital gains is not added is because capital gains have fixed taxation rates unlike salary, or business income. Now, I also have an additional income of Rs.
I hope this example gives you a basic orientation of how to treat your income and evaluate your tax liability. We will now proceed to find a list of important factors that have to be kept in mind when declaring trading as a business income for taxation.
If you file your income tax returns on time July 31 st for non-audit case and Sept 30 th for audit case, you can carry forward any business loss that is incurred. Speculative losses can be carried forward for 4 years, and can be set-off only against any speculative gains you make in that period.
Non-speculative losses can be set-off against any other business income except salary income the same year. So they can be set-off against bank interest income, rental income, capital gains, but only in the same year.
You carry forward non-speculative losses to the next 8 years; however do remember carried forward non-speculative losses can be set-off only against any non-speculative gains made in that period. In such case my tax liability for the year would be —. I have a non speculative business loss of Rs. If you incur speculative intraday equity loss of Rs.
I can carry forward speculative loss of Rs. Also to reiterate, speculative business losses can be set-off only against other speculative gains either the same year or when carried forward. Towards the end of a financial year you might day trader income india realized profits and unrealized losses. If you let it be, you will end up paying taxes on realized profits, and carrying forward your unrealized losses to next year.
This would mean a higher tax outgo immediately, and hence any interest that you could have earned on that capital which goes away as taxes. You can very easily postpone this tax outgo by booking the unrealized loss, and immediately day trader income india back on the same trade. By booking the loss, the tax liability for the financial year would reduce.
We at Zerodha are the only brokerage in India presently giving out a tax loss harvesting report, which will spot all opportunities for you to harvest losses. Click here to learn more. It is called BTST when you buy today and sell tomorrow without taking delivery of the stock. Since you are not taking delivery, should it be considered as speculative similar to intraday equity trading? There are both schools of thought, one which considers it to be speculative because no delivery was taken. A factor to consider is if such BTST trades are done just a few times in the year show it as STCG, but if done frequently it is best to day trader income india it as speculative business income.
Paying advance tax is important when you have a business income. When you have a business income you have to pay most of your day trader income india before the year ends on March 31 st. It could be more or less. The day trader income india way to pay advance tax is by paying tax for that particular time period, so Sept 15 th pay for what was earned until then, and by March 15 th close to the year end, you can make all balance payments as you would have a fair idea on how you will close the year.
You can claim a tax refund if you end up paying more advance tax than what was required to pay for the financial year. Tax refunds are processed in quick time by IT department. You can make your advance tax payments online by clicking on Challan No. Also, here is an interesting link that helps you calculate your advance tax — http: You can also check this link to see how exactly interest or penalty is calculated for non-payment of advance tax.
Both day trader income india financial statements might need an audit based on your turnover and profitability. We will discuss more on this in the next chapter. An audit is required if you have a business income and if your business turnover is more than Rs 1 crore for a financial year. For equity traders, an audit is also day trader income india as per section 44AD in cases where turnover is less than Rs. There are various types of audits prescribed under different laws like company law requires a company audit; cost accounting law requires a cost audit, etc.
Ideally this audit should be done by the IT department itself, but considering the number of balance sheets out there it is surely impossible for IT department to audit each one of them. You the tax payer can use any CA of your choice.
We will in the next chapter briefly explain how a CA typically creates these two statements. It also helps lenders evaluate credibility, and act as a check for any day trader income india practices.
Which ITR form to use? I have come across incidents where people have declared both speculative and non-speculative as capital gains to avoid having to declare business income, and not having to use ITR3.
Taking a shortcut like this could mean a lot of trouble if called for an IT scrutiny. Business expenses when trading — Advantage of showing trading as a business is that you can show all expenses incurred as a cost which can then be used to reduce your tax outgo, and if a net loss for the year after all these costs, it can be carried forward as explained above.
Disclaimer — Do consult a chartered accountant CA before filing your returns. Audit is also required as per section 44AD in cases where turnover is less than Rs. I have two questions — 1 Is an audit required in case I am incurring loss and my turnover is less than 1 cr? But if your net income for the year is above 2. There is no need of calculating turnover for advance tax.
Based on whatever profit you have made till the end of sept, dec, and March periods, just pay incremental tax accordingly. Audit is based on your turnover. Since there is a loss and you fall under a tax day trader income india, yeah audit is needed.
Check all the chapters, audit is quite day trader income india simple thing. If I have a loss of 20, then i need to get it audited for which i day trader income india have to pay CA anotherSo more loss if you make a loss in trading. What a shame, Audit should not be there if there is loss. Advance tax is not required if income is computed under section 44AD; see Day trader income india of Income tax Act.
The taxes you are paying is transaction tax. Income day trader income india still has to be paid. You need to add this 1lk to 3. Sir, first of all day trader income india article.
I have a personal question, please help me out. I don't trade daily. In whole yr, I might have placed less than orders in total. I do not wish to get my account audited and also not claim any loss in ITR 4. When do I have to pay tax and I want to know about taxation charges as well as do I need to audit. I am just a stock trades. One more if earn above 1 crore in a single year what will be the taxation on that.
Trading is a business, so like every business you need to pay an advance tax every quarter on your expected day trader income india end income. IF you pay more, you can always get a refund. Tax is not on the turnover, it is on the net profits only. Turnover is to determine if you need a tax audit or not. Hi, Whether tax audit required in foll0wing case: Total trading turnover — more than 1 crore in FYbut incurred loss in trading. Also, total income in same year is less than 2. Is tax audit required?
Also — as a valued added servicecan Zerodha provide services of tax consultants to prepare file returns of traders? My Salary is — Rs. In your case since no advance tax has been paid till now, for April 1st to March 31st point day trader income india below is applicable C and from April 1st this year till you pay the taxes point 2 B is applicable.
For deferment of advance tax. The said interest is levied 0. Hey Krish, sorry if I suddenly sounded like a chartered accountant putting up this section of the act. For advance tax not paid between April 1st to March 31st3. Vishal, the penalty can be paid, but that will be black mark on your ITR. I have gone through your article about taxation.
It has cleared many concepts. Can Zerodha provide any support for audit, CA? In such case, what advise would you give to beginners like me? I am salaried employee and I have been filling ITR1 form for day trader income india 2 years.
Day trading is speculation in securitiesspecifically buying and selling financial instruments within the same trading day. Strictly, day trading is trading only within a day, such that all positions are closed before the market closes for the trading day. Many traders may not be so day trader income india or may have day trading as one component of an overall strategy. Traders who day trader income india in day trading are called day traders. Traders who trade in this capacity with the motive of profit are therefore speculators.
The methods of quick trading contrast with the long-term trades underlying buy and hold and value investing strategies. Some of the more commonly day-traded financial instruments are stocksoptionscurrenciesand a host of futures contracts such as equity index futures, day trader income india rate futures, currency futures and commodity futures.
Day trading was once an activity that was exclusive to financial firms and professional speculators. Many day traders are bank or investment firm employees working as specialists in equity investment and fund management. However, with the advent of electronic trading and margin tradingday trading is available to private individuals.
Some day traders use an intra-day technique known as scalping that usually has the trader holding a position for a few minutes or even seconds. Most day traders exit positions before the market closes to avoid unmanageable risks—negative price gaps between one day's close and the next day's price at the open.
Another reason is to maximize day trading buying power. Day traders sometimes borrow money to trade. This is called margin trading. Since margin interests are typically only charged on overnight balances, the trader may pay no fees for the margin benefit, though still running the risk of a margin call.
The margin interest rate is usually based on the broker's call. Because of the nature of financial leverage and the rapid returns that are possible, day trading results can range from extremely profitable to extremely unprofitable, and high-risk profile traders can generate either huge percentage returns or huge percentage losses. Because of the high profits and losses that day trading makes possible, these traders are sometimes portrayed as " bandits " or " gamblers " by other investors.
The common use of buying on margin using borrowed funds amplifies gains and losses, such that substantial losses or gains can occur in a very short period of time. In addition, brokers usually allow bigger margins for day traders. Because of the high risk of margin use, and of other day trading practices, a day trader income india trader will often have to exit a losing position very quickly, in order to prevent a greater, unacceptable loss, or even a disastrous loss, much larger than his or her original day trader income india, or even larger than his or her total assets.
Originally, the most important Day trader income india. A trader would contact a stockbroker, day trader income india would relay day trader income india order to a specialist on the floor of the NYSE.
These specialists would each make markets in only a handful of stocks. The specialist would match the day trader income india with another broker's seller; write up physical tickets that, once processed, would effectively transfer the stock; and relay the information back to both brokers. One of the first steps to make day trading of shares potentially profitable was the change in the commission scheme.
Inthe United States Securities and Exchange Commission SEC made fixed commission rates illegal, giving rise to discount brokers offering much reduced commission rates. Financial settlement periods used to be much longer: Before the early s at the London Stock Exchangefor example, stock could be paid for up to 10 working days after it was bought, allowing traders to buy or sell shares at the beginning of a settlement period only to sell or buy them before the end of the period hoping for a rise in price.
This activity was identical to modern day trading, but for the longer duration of the settlement period.
But today, to reduce market risk, the settlement period is typically two working days. Reducing the settlement period reduces the likelihood of day trader income indiabut was impossible before the advent of electronic ownership transfer.
The systems by which stocks are traded have day trader income india evolved, the second half of the twentieth century having seen the advent of electronic communication networks ECNs. These are essentially large proprietary computer networks on which brokers could list a certain amount of securities to sell at a certain price the asking price or "ask" or offer to buy a certain amount of securities at a certain price the "bid".
The first of these was Instinet or "inet"which was founded in as a way for major institutions to bypass the increasingly cumbersome and day trader income india NYSE, also allowing them to trade during hours when the exchanges were closed. Early ECNs such as Instinet were very unfriendly to small investors, day trader income india they tended to give large institutions better prices than were available to the public.
This resulted in a fragmented and sometimes illiquid market. The next important step in facilitating day trading was the founding in of NASDAQ —a virtual stock exchange on which orders were transmitted electronically. Moving from paper share certificates and written share registers to "dematerialized" shares, computerized trading and registration required not only extensive changes to legislation day trader income india also the development of the necessary technology: These developments heralded the appearance of " market makers ": A market maker has an inventory of stocks to buy and sell, and simultaneously offers to buy and sell the same stock.
Obviously, it will offer to sell stock at a day trader income india price than the price at which it offers to buy. This difference is known as the "spread".
The market maker is indifferent as to whether the stock goes up or down, it simply tries to constantly buy for less than it sells.
A persistent trend in one direction will result in a loss for the market maker, but the strategy is overall positive otherwise they would exit the business. Today there are about firms who participate as market makers on ECNs, each generally making a market in four to forty different stocks. Another reform made was the " Small Order Execution System ", or "SOES", which required market makers day trader income india buy or sell, immediately, small orders up to shares at the market maker's listed bid or ask.
In the late s, existing ECNs began to offer their services to small investors. New brokerage firms which specialized in serving online traders who wanted to trade on the ECNs emerged.
Archipelago eventually became a stock exchange and in was purchased by the NYSE. Moreover, the trader was able in to buy the stock almost instantly and got it at a cheaper price. ECNs are in constant flux. New ones are formed, while existing ones are bought or merged. As of the end ofday trader income india most important ECNs to the individual trader were:. This combination of factors has made day trading in stocks and stock derivatives such as ETFs possible.
The low commission rates allow an individual or small firm to make a large number of trades during a single day. The liquidity and small spreads provided by ECNs allow an individual to make near-instantaneous trades and to get favorable pricing.
The ability for individuals to day trade coincided with the extreme bull day trader income india in technological issues from to earlyknown as the Dot-com bubble. In March,this bubble burst, and a large number of less-experienced day traders began to lose money as fast, or faster, than they had made during the buying frenzy. The NASDAQ crashed from back to ; many of the less-experienced traders went broke, although obviously it was possible to have made a fortune during that time by shorting or playing on volatility.
In parallel to stock trading, starting at the end of the s, a number of new Market Maker firms provided foreign exchange and derivative day trading through new electronic trading platforms. These allowed day traders day trader income india have instant access to decentralised markets such as forex and global markets through derivatives such as contracts for difference. Most of these firms were based in the UK and later in less restrictive jurisdictions, this was in part due to the regulations in the US prohibiting this type of over-the-counter trading.
These firms typically provide trading on margin allowing day traders to take large position with day trader income india small capital, but with the associated increase day trader income india risk. Retail forex trading became a popular way to day trade due to its liquidity and the hour nature of the market. The following are several basic strategies by which day traders attempt to make profits.
Besides these, some day traders also use contrarian reverse strategies more commonly seen in algorithmic trading to trade specifically against irrational behavior from day traders using these approaches. It is important for a trader to remain flexible and adjust their techniques to match changing market conditions. Some of these approaches require shorting stocks instead of buying them: There are several technical problems with short sales—the broker may not have shares to lend in a specific issue, the broker can call for the return of its shares at any time, and some restrictions are imposed in America by the U.
Securities and Exchange Commission on short-selling see uptick rule for details. Some of these restrictions in particular the uptick rule don't apply to trades of stocks that are actually shares of an exchange-traded fund ETF.
Trend following day trader income india, a strategy used in all trading time-frames, assumes that financial instruments which have been rising steadily will continue to rise, and vice versa with falling.
The trend follower buys an instrument which has been rising, or short sells a falling one, in the expectation that the trend will continue. Contrarian investing is a market timing strategy used in all trading time-frames. It assumes that financial instruments which have been rising steadily will reverse and start to fall, and vice versa.
The contrarian trader buys an instrument which has been falling, or short-sells a rising one, in the expectation that the trend will change. Range trading, or range-bound trading, is a trading style in which stocks are watched that have either been rising off a support price or falling off a resistance price.
That is, every time the stock hits a high, it falls back to the low, and vice versa. Such a stock is said to be "trading in a range", which is the opposite of trending.
A related approach day trader income india range trading is looking for moves outside of an established range, called a breakout price moves up or a breakdown price moves downand assume that once the range has been broken prices will continue in that direction for some time.
Scalping was originally referred to as spread trading. Scalping is a trading style where small price gaps created by the bid-ask spread are exploited by the speculator. It normally involves establishing and liquidating a position quickly, usually within minutes or even seconds.
Scalping highly liquid instruments for off-the-floor day traders involves taking quick profits while minimizing risk loss day trader income india. The basic idea of scalping day trader income india to exploit the inefficiency of the market day trader income india volatility increases and the trading range expands. When stock values suddenly rise, they short sell securities that seem overvalued.
Rebate trading is an equity trading style that uses ECN rebates as a primary source of profit and revenue. Most ECNs charge commissions to customers who want to have their orders filled immediately at the best prices available, but the ECNs pay commissions to buyers or sellers who "add liquidity" by placing limit orders that create day trader income india in a security.
Rebate day trader income india seek to day trader income india money from these rebates and will usually maximize their returns by trading low priced, high volume stocks. This enables them to trade more shares and contribute more liquidity with a set day trader income india of capital, while limiting the risk that they will not be able to exit a position in the stock.
The basic strategy of news playing is to buy a stock which has just announced good news, or short sell on bad news. Such events provide enormous volatility in a stock and therefore the greatest chance for quick profits or losses. Determining whether news is "good" or "bad" must be determined by the price action of the stock, because the market reaction may not match the tone of the news itself. This is because rumors or estimates of the event like those issued by market and industry analysts will already have been circulated before the official release, day trader income india prices to move day trader income india anticipation.
The price movement caused by the official news will therefore be determined by how good the news is relative to the market's expectations, not how good it is in absolute terms.
Keeping things simple can also be an day trader income india methodology when it comes to trading. These traders rely on a combination of price movement, chart patterns, volume, and other raw market data to gauge whether or not they should take a trade.