Intraday trading WON'T make you rich

Summary

Highlights

• Intraday trading promises quick money but hides large risks. ⚠️
• Leveraging is tempting but can lead to significant losses. 🔄
• Magic strategies sound appealing but aren't foolproof. 🧩
• Traders need to manage risk and have realistic expectations. 📊
• Intraday traders often make money less than half the time; success relies on managing risks and profits. ⏳

Key Takeaways

• Intraday trading can seem like an easy path to riches, but it's more complex than it appears. 💸
• Leverage in trading amplifies both potential profits and possible losses, acting as a double-edged sword. ⚔️
• Success in intraday trading involves managing risks, not relying on 'magic' strategies. 🧙‍♂️
• Influencers often oversell intraday trading; realistic expectations are crucial. 🎯
• Even experienced traders frequently face losses, highlighting the importance of risk management. 📉

Overview

Chapters

• 00:00 - 00:30: Introduction and Misconceptions About Intraday Trading Intraday trading is often glamorized in newspapers and online articles, with many traders claiming to have earned significant profits through it. This chapter aims to provide an honest perspective on intraday trading and its profitability, acknowledging that while it is possible to make money from this method, the reality is often different from popular beliefs.
• 00:30 - 01:00: Understanding Intraday Trading The chapter 'Understanding Intraday Trading' aims to demystify the concept of intraday trading by addressing the sometimes unrealistic expectations set by the internet. It sets out to explain what intraday trading is, how expectations compare to reality, and to assess its feasibility as a strategy. The discussion includes the definition of intraday trading, which involves buying and selling financial instruments within the same trading day, specifically between a market open at 9:15 a.m. and close at 3:30 p.m. It also promises to explore scenarios where intraday trading could indeed be profitable.
• 01:00 - 01:30: Expectations vs Reality in Intraday Trading The chapter titled 'Expectations vs Reality in Intraday Trading' explores the concepts and outcomes involved in intraday trading. It uses an example to illustrate that if a trader buys a stock at 100 rupees and the market value increases to 110 rupees on the same day, the trader can sell the stock for a profit of 10 rupees per share. If the trader had 1,000 shares, this equates to a 10,000 rupees profit before deductions like brokerage fees and taxes, all within a few hours. The chapter discusses the appeal of quick profits in intraday trading and hints at other potential strategies.
• 01:30 - 03:30: Intraday Trading Example with Dabur Stock The chapter discusses the allure and misconceptions about intraday trading, particularly using Dabur stock as an example. It highlights that many online influencers portray intraday trading as an easy way to make large profits, but emphasizes the reality is different. It addresses why people are attracted to intraday trading and the unrealistic expectations often set by online sources, such as the belief that it requires only a low capital investment.
• 03:30 - 06:00: Risks and Leverage in Intraday Trading The chapter 'Risks and Leverage in Intraday Trading' discusses the concept of leverage in stock trading, allowing traders to control a large amount of stock with a relatively small amount of money. This leverage can lead to larger profits, but also increases risk. The chapter contrasts stock investment with traditional investments such as fixed deposits, which typically offer lower returns (around 7% a year) but with significantly less risk. The importance of compounding in stock investments over several years (5, 7, or 10 years) is also highlighted.
• 06:00 - 12:00: Flaws in Intraday Trading Strategies and Expectations This chapter discusses the challenges and misconceptions in intraday trading strategies. It highlights how intraday trading can appear enticing due to the potential for making significant profits with minimal capital. However, it cautions that this perception can be misleading when compared to long-term investment strategies. Using a specific example, the chapter contrasts the long-term investment approach with the intraday method, illustrating the inherent issues in the latter.
• 12:00 - 15:00: Probability and Risk-Reward in Trading The chapter discusses the concept of probability and risk-reward in trading. The speaker shares their personal account balance and demonstrates how limited funds impact their ability to buy shares. They illustrate this by opening an order to purchase 'dber' shares, noting the specific amount they can invest based on their current financial situation. This example highlights practical considerations traders face in managing their portfolios and making investment decisions.
• 15:00 - 16:00: Conclusion: Can You Make Money from Trading? The chapter explores how an individual with $12,000 is considering investing in shares, specifically focusing on long-term versus intraday investment strategies. The person decides to set aside $9,800 for a long-term purchase of DBer shares. They contemplate switching to MIS, which is an intraday trading strategy, to evaluate the potential outcomes. This section reflects on the decisions and processes involved in managing and potentially profiting from stock trading.

Intraday trading WON'T make you rich Transcription

• 00:00 - 00:30 newspapers and online articles are flooded with Traders claiming to have made so much money all they need to do is sit down do a bunch of Jing bong and make a lot of cash and I know you feel if they can do it why can't I but the truth can be really different I've been trading for a while now so I'll give you an honest perspective on whether intraday trading can actually make money or not so there's nothing wrong with intraday trading and it's not that nobody makes money from intraday trading
• 00:30 - 01:00 but I think the expectations is a little crazy on the internet so before we delve there let's first understand what's intraday trading what are the expectations versus reality and then talk about if it's possible or not and we'll also talk about situations where it's actually profitable so let's start with the first thing what is intraday trading intraday as the name suggests is intraday as in within the day markets open at 9:15 a.m. and close at 330 which
• 01:00 - 01:30 means you take a trade let's say you buy a stock at 100 rupees and then the market appreciates that stock goes to 110 you exit that stock before the day ends so it's intraday and you make a 10 Rupees profit now the cool thing is if you had 1,000 shares that you traded with you made 10,000 rupees before brokerage taxes and all the other things in just a few hours another interesting thing you can do when you intraday trade
• 01:30 - 02:00 is that you can profit if the market Falls and we'll talk about this later but the point is that a lot of influencers online nowadays are making it look that intraday is an easy way to make millions of rupees but the reality is completely different so why do people like intraday trading and they're tempted to actually try it let's talk about the expectations that the internet will set for you for intraday trading the first expectation set is low Capital
• 02:00 - 02:30 let me explain with a small amount of money you'll be able to control a large amount of stock and because of this your profit will also be larger so if you are just an investor the problem is if you invest in say a fixed deposit it will give you 7% a year that doesn't sound too interesting if you invest in stocks as we've explained before you have to compound it for 5 years 7 years 10
• 02:30 - 03:00 years that's also boring but with intraday something interesting can happen you will look at it and it will feel like you can make a lot of money with a small amount of capital and let me show this to you with an actual example this is daber now first let's look at it from the perspective of a long-term investment this is not investment advice I'm just trying to show you what long-term versus intraday looks like and also why intraday is a problem so in D the stock is trading at
• 03:00 - 03:30 about 650 rupe so let me do one thing let me show you the funds in my account I have 12,7 rupees in my account right now which means I can only buy 12,000 rupees worth of shares for the long term so let's see what that looks like I will open dber shares I'll open the buy so this buy order basically shows that I'm going to buy dber on this exchange it's one quantity and the amount is $650 three amount is like you guessed you pay
• 03:30 - 04:00 this to get one share of dber so since I have 12,000 let me change this to say I guess 15 and uh refresh it and I'll see that it shows 9,800 9,800 I have 9,800 that means for the long term I can spend 9,800 and buy this stock for a longterm investment but now let me switch from long-term to Mis and Mis means intraday let's see what
• 04:00 - 04:30 happens and keep your eye on that amount area which says 9,800 right now so I'll change it to intraday see that it's become 1,900 so let me get this straight if I want to invest long-term 15 shares all I can buy but if I want to intraday trade 15 shares only costs me or requires a margin of 1,961 This Means since I have 12,000 rupees I can can trade with more right
• 04:30 - 05:00 so let me change this to 90 okay 90 quantity so 90 shares if I trade I will require 11,746 which otherwise would have required a lot more money for an investor but for a Trader instead of trading just 15 I can trade with 90 which means my profit will also be larger and so will my losses but it doesn't matter Traders especially beginners are big optimist so let me place an order and actually buy this
• 05:00 - 05:30 stock I place this order and I'm going to the order window and I can see the dber has been placed and you can see why this leverage increases your profit multifold if the market goes on your side but you know what that is precisely the problem if this stock Falls by just 1% and I am 10 times leveraged I will lose 10 times me more just because your
• 05:30 - 06:00 broker allows you leverage doesn't mean you should use it Leverage is a double-edged sword that beginner should not touch now imagine this on one side if you had taken a long-term investment with 15 shares and on the other side you had done this intraday trade with 90 shares and let's say darber moved up in our favor by 10 Rupees in just a few minutes 10 rupes multiplied by 90 would be 900 rupes profit in in just a few
• 06:00 - 06:30 minutes and over here it would be just 150 rupe so you can see clearly why people think less time less Capital very exciting very spicy boring compounding old people do this the difference is massive people think that they can make small amounts of money really quickly but imagine if just the opposite happened it fell 20 30 40 rupees what would happen to this trade also imagine that you were doing
• 06:30 - 07:00 this with a larger Capital like 1 lakh or 2 lakh could you really lose 10% 20% in just a few minutes the answer is yes you could the second expectation that you'll be sold on the internet and by all these people is guaranteed returns now here how this story goes people will say if the market goes up an intraday Trader can make money if the market goes down through something called Short Selling and intraday Trader can make
• 07:00 - 07:30 money if markets fall too now I remember around 2008 or 9 I met this one uncle and he said beta I think you know if you learn a little bit of analysis trading can be very simple I said okay Uncle what's your point he said very simple I know that this company moves 10 Rupees every day I've been watching it for a while every day it moves 10 Rupees with some Capital that I have I'll buy 1,000
• 07:30 - 08:00 shares whether I go long or short doesn't matter because move as soon as it moves 1 rupee in my favor I'll exit and make 1,000 rupees and I'll do this a few times in the day and I'll walk with 5 to 6,000 rupees a day I am a simple man I just need 5 6K a day times 20 days I'll trade I'll make some money I'm happy that's my strategy that's not a strategy that's a
• 08:00 - 08:30 bankruptcy plan and I'll explain how one the costs of trading are more than you think you will pay government tax if you make a profit you'll pay income tax if you enter you have to pay transaction taxes so your entry if it's at 100 it's not 100 it's 100 plus expenses which means that the market needs to move a little more in your favor now for you to make that profit third you have to predict the D ction of the market now we
• 08:30 - 09:00 always imagine the markets are going sideways all the time and we will make 1 one1 1,000 rupees and it'll add up to a lack by the end of the month this does not happen here is what's actually going to happen you will take a long trade you will wait for 1 Rupees to go up for you to make that 1,000 but that day the market will reverse and fall 30 rupes and you will lose 30,000 rupe you will do this again and lose another 30 ,000 rupes wiping away any gains that you
• 09:00 - 09:30 made before that yes I said gains it's possible for you to make money sometimes when you do this but 1 2 three bad trades will wipe away everything and take away that Capital 2 so now let's come to point number three the magic strategy basically you will get one strategy online or you can read a book and you'll feel like you figured something out let me show you an example of what a strategy looks like so what
• 09:30 - 10:00 I'm going to do is I'm going to open a 10-minute chart of dber choosing this stock completely randomly and I've added the magic moving average over here this magic moving average is orange in color and it's a 100 moving average what it is is it's tracking the average movement of daber over the last 100 bars each bar is 10 minutes long now all you need to do is look at it whenever the price comes close to the the orange line after some
• 10:00 - 10:30 time it bounces back see over here it's bounced back over here it's bounced back over here it's bounced back over here it's bounced back so all you need to do is track when the market comes close to this then once it starts moving up you buy it and you'll make money on the way up like look at this over here on this day from the orange line all the way here the market moved up a full 2% but let's look at it a little closer here you'll notice the market came down down you would have bought it
• 10:30 - 11:00 here but the market fell completely now you'll think that the market went up but it's intraday actually the day ended so you would have had to close your position and the market well gave you a loss so this would have been a loss trade the market gapped up went all the way up there was no way for you for you to enter because it just moved very quickly and you missed the entire move the same thing happens again and again until you see a sideways Market the market touch is the orange line what
• 11:00 - 11:30 multiple times during the day you would have tried to enter multiple times and gotten nowhere so looking at this strategy from afar looks really good but executing it intraday changes a lot of things the market can just Gap up it can Gap Down News will affect it but the amazing thing about a magic strategy is it will always feel like if you make money you'll feel like a king and if you lose
• 11:30 - 12:00 money it'll feel like you just didn't analyze enough maybe if you add one more rule one more technicality next time you'll be able to catch the trend the final expectation is probability if you understand this you'll understand the entire game of money now you'll think a Trader a successful Trader probably makes money 9 out of 10 times this is not true most Traders make money 50/50 or 40 60 which means 40 trades make
• 12:00 - 12:30 money 60 trades lose money so that's 1 2 3 4 and they lose the rest of the times it could also be that they're making money only three times out of 10 but the difference is when they make money they make a little more than how much they actually lose and just that difference of how much they make makes all the difference and this is called a risk reward ratio so they make a little more money then they lose so 1 is to two or 1
• 12:30 - 13:00 is to three is quite common but that difference is how they actually make cash now understand this in trading you have to take multiple trades and be right many many times and every time you write you'll accumulate that into a profit now let's compare this to say Warren Buffett's portfolio War bit's portfolio is very different he may have a worse loss rate than this he would have probably
• 13:00 - 13:30 invested in many many stocks over his entire lifetime but a few of these stocks earned him all this money just like that so what's the bottom line can you make money from Trading the answer is yes just like any other profession if you spend loads of money time effort to figure it out of course you can all these hedge funds over here actually make money from Trading but they don't approach it as a getrich scheme they treat it as a business mathematics ially figure out how the market works and make
• 13:30 - 14:00 money over a period of time [Music]