Rules for Intraday Trading

Almost everyone finds intra-day (margin) trading fascinating. Most young and first-time day-traders especially Option traders feels uits very easy  to  gain 5-10 per cent each day trading in Options.

For instance, if you deposit Rs 20,000 with your broker then he can allow you to buy or sell shares worth Rs 80,000 (Rs 20,000 multiplied by 4) on a particular day. At the end of the day you have to sell whatever stocks you have bought irrespective of profit or loss.
But things are not all that rosy as they seem to be. You may buy a stock at a higher price and the stock price of that stock may fall after that. Before the market closes at 3.30 pm everyday you will have to sell that stock to square off your trade. That is the most important rule of day trading. If you sell it at a price lower than your purchase price then you make a loss. Similarly, if you sell a stock at a higher price and purchase that stock again on the same day for a price higher than what you bought for, you again make a loss.
So day-trading is a double-edged sword which if not handled with care can hurt young and first-time day traders. Hence, in depth knowledge and a lot of insight is needed for intra-day trading. In fact for a novice, intra day trading can turn out to be a dangerous affair.
Does that mean you should..

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