How Much Investors Can Expect Returns from Intraday Trading?[Guide for Beginners]

One of the benefits of intraday trading is that at the end of each trading day, you can withdraw your money in cash form and use it for your needs. If, as an intraday trader, the day has been a profitable one, then you with have a sizeable amount to carry home as that day’s ‘earning’. However, if you have faced a loss in the markets, then you will not even have the initial invested amount with you when you close your trades at the end of the day. Hence, expecting returns in intraday trades are highly variable and there are no guarantees or assurances on the earnings front. Let us look at the below examples to understand the same.

Trading Example 1:

In this example, Apollo shares are being purchased in the price range of 877.5 and 877.15 for a target price of 898 and a stop loss of 868.4. The number of shares is 800. Now let’s understand the situation if the target is hit. Here the quantity of shares = 800 Average Entry price = 877.1 Amount invested = INR 701680 Let’s assume that the target get’s achieved in this trade. Exit price = 898 Shares sold for = INR 718400 Realized return = INR 16720 Rate of return = 2.38% In this example, the rate of return is 2.38% which might appear to be a low rate of return. On the other hand, if we look at the profit generated, the amount of Rs. 16,720 might appear as a handsome amount. However, the reality is that the profit of 16.720 has been generated on an investment of Rs. 7 lac, which is quite a high amount.

Trading Example 2:

This is an example of an intraday trade where the recommendation has been given for trading one lot of Reliance options contract with May expiry, for the entry price range between 33.4 and 33.5, target of 43 and stoploss of 25. The lot size for reliance is 500 options. In this example as well, let us assume that the target is achieved. Hence, the quantity of Options purchased = 500 Average entry price for the options = 33.45 Invested amount = INR 16725 Let’s once again assume that the target is hit in this transaction Exit price = 41 Option sold for INR 20500 Realized profit = INR 3775 Rate of return = 22.5% In this case, the amount received on return is only Rs. 3775. This might seem like a small sized earning. However, in this case the investing capital was Rs. 16,725 and the return generated on this investment in a single trade was 22.5% which is a fairly high return.

Trading Example 3:

In this trade, the order is being placed for two lots of Apollo tyres futures with May expiry, to be purchased between 93.1 and 93.3 and to be sold at a target price of 96.3 and stop loss of 91.85. The lot size of this company’s futures is 3000. Let us assume that this trade hits the stop loss and results in loss. Amount of futures contracts purchased = 6000 Entry price at which they are bought = 93.2 Amount invested in buying the futures = INR 559200 Assuming that the stop loss is hit, Exit price for the trade = 91.85 Amount received after sell order = INR 551100 Return = INR -8100 Rate of return = -1.4% In a case like this, the amount lost is Rs. 8100. Also, the trader has to pay the transaction cost for this trade which would further add up to the loss incurred on this trade. The rate of return in such a scenario is -1.4% which shows that a controlled risk was taken and the position was squared off quickly.

Note: Capitalvia does not give above recommendation to execute. It is fictional examples to explain.

From the above examples it can be understood that returning in the intraday stock markets can never be fixed and it keeps varying from trader to trader. There are various factors which can influence your return in intraday markets. Some of these factors are invested capital, trading strategy, risk appetite and emotional control during trades. If all these factors are monitored properly, then there can be a great scope of returning in the day trading. You may also take the help of a SEBI registered investment advisor who can guide you through your investments by providing research-based recommendations for investment.