Trading has become the most sought-after preference to earn extra money. Today, people from a young age are exploring about the stock market. Role of social media influencers is significant in creating awareness and interest in stock trading. A bull run in the market brings a remarkable upswing in portfolios, motivating investors to participate in the stock market. With an increasing familiarity with trading, individuals from low-income groups to retirees are exploring ways to grow their wealth in the stock market.
Traders seeking to profit from the daily price movements indulge in intraday trading. They must keep up with the daily trends, price changes, and momentum to make regular profits.
You can open a Demat Account to start investing in the stock markets. It is mandatory to have a Demat & Trading Account to invest in the share market. Let us take a look at the power of margin and leverage trading.
Investors seeking to deal in shares with values higher than their available capital can benefit from the margin and leverage trading. Suppose you set aside a portion of your savings to invest in the stock markets, but suddenly you spot an opportunity where a higher capital is required than your available fund.
In that case, you can borrow the additional funds from your broker, through Margin Trade Funding (MTF) and increase your exposure to the market. In return, the broker charges interest on the funded amount. To avail of the facility of Margin Trade Funding, you should have an account with a stockbroker offering MTF.
Bajaj Financial Securities Ltd. provides the facility of MTF at low-interest rates, and an investor can buy shares worth up to 3.5 times more than their available capital.
Derivatives are financial contracts that derive their value from other underlying assets. Futures is a derivative contract that helps investors transact an asset on a future date at a pre-determined price. It allows investors to take a position in shares through ‘Lots’, where a fixed number of shares are included in a Lot.
Each company’s share has a lot size in the Futures contract, and an investor can take a position for a high number of shares by just paying a portion of the total share value. This fraction of money paid is called margin. Suppose your margin for futures is 20%. It implies that you are eligible to buy or sell 5x more shares in futures than equity.
Option Contract is another form of Derivative that helps in leverage trading. Option gives a wider range of prices at which an underlying asset can be transacted on a future date. An Option chain gives the series or price points, known as strike price at which the future transaction can be performed.
An option buyer has to pay the premium to take position in the option contract, whereas an option seller has to pay the margin to take the position. Investors can buy a Call Option of an index or share when they expect the prices to go up, and they can buy a Put Option when they expect the price to go down.
Intraday trading is buying and selling shares on the same day. In intraday trading, one can take a position by paying a fraction of the share value. You can increase market exposure and build effective strategies with leveraged trading in intraday.
However, as such strategies may magnify your profits, they could also amplify your losses. It would help to analyze all the risks before setting up your trade.
Essential Tools for Trading Intraday, Futures & Options
Trading platforms provide the required tools for intraday traders to trade proficiently. Such tools include technical charts and indicators to identify price trends and support-resistance levels.
Traders looking at intraday techniques can use tools such as Moving Averages, Bollinger Bands, Relative Strength Index (RSI), and Moving Averages Convergence Divergence (MACD) to conduct in-depth analysis.
Moreover, traders seeking profits through futures and options can refer to additional data such as Put-Call Ratio, and Open Interest, and assess the market sentiment & perform in-depth analysis.
Choosing the Right Broker
To maximize your profits, find a suitable brokerage firm that offers low brokerage charges while providing the essential tools to facilitate your trading. Bajaj Privilege Club provides premium membership for Demat and Trading account holders of Bajaj Securities Limited (BFSL).
You can open an account with BFSL and subscribe to the Bajaj Privilege club at just Rs. 9,999 for one year (inclusive of GST). Bajaj Privilege club offers unique benefits such as a flat brokerage rate of Rs. 5/order across all segments, margin trade financing at 9.25% p.a., and feature to carry the position for up to 365 days, zero DP AMC, and dedicated dealing support.
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