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What Happens If I Forgot to Sell Intraday Shares?
What Happens If you Forgot to Sell Intraday Stocks in Zerodha Stock brokers or banks that hold demat accounts of the trader play a responsible role in Intraday trading. Brokers like Zerodha, Upstox, ICICI Bank, Axis Bank, etc take the responsibility of their clients by automatically square off theRead more
What Happens If you Forgot to Sell Intraday Stocks in Zerodha
Stock brokers or banks that hold demat accounts of the trader play a responsible role in Intraday trading.
Brokers like Zerodha, Upstox, ICICI Bank, Axis Bank, etc take the responsibility of their clients by automatically square off the open positions (MIS Orders) at the closure of the stock markets.
It can happen when a trader for some reason is unable to buy/sell stocks before the stock market closes down.
Conversion: Intraday Trade into Delivery
The stock markets do suspend the trading of a particular stock on reaching the upper circuit limit, or lower circuit limit.
The stock market does convert the intraday trade into a delivery trade.
Depending upon the availability, the shares shall be transferred to the traders’ demat accounts or credited into stock brokers accounts.
Short Delivery:
It is a condition that arises from the fact that the trader executes open sale and the trading demat account runs short of stocks.
A buyer will have bought and paid for the stocks, and is unable to receive the stocks in his demat account. Such a situation can be encountered by the non-availability of the stocks in the demat account.
A situation of this sort can happen due to non liquidity of funds, or upper circuit.
The exchange will perform trading of stocks on behalf of the seller and pass over the stocks to the committed buyer.
During this period, the stock exchange will auction stocks with other sellers and deduct the money from the trading account to compensate for the loss incurred by the buyer.
Intraday Sell Order:
You must buy back the shares to square off the holding in sell order. Either, you must square off manually or automatically the sell order else your order shall be put to auction and your account will be debited with a price the stock is sold.
To avoid the applicable penalty, you can convert the shares from intraday to delivery stocks and wait for the next trading session.
In the next trading session, you can square off the original intraday sell position and safeguard from the trading penalties.
Stock Hitting the Upper Circuit:
The MIS/CO position held by the trader does carry additional risks. And, in the most possible scenario, one is unable to square off positions. Such a situation arises for stocks hitting the upper or lower circuit limit.
During such circumstances, a trader will have to confront overnight and auction risks with an inclusion of the leverage positions.
Open Sell Intraday Position:
A stock hitting the upper circuit price means a trader will find buyers and it is hard to see any sellers.
The stocks from the trader’s demat account shall be delivered to the stock exchange. And, subsequently the seller will get the negotiated price credited into the trading account.
In case, the trader does not hold the stocks for the option sell in the demat account. Then, the trader will have to confront the ‘short delivery,’ the stock exchange will perform an auction to purchase the shares on behalf of the seller and deliver it to the buyer of the sell trade on T+2.
The stock market shall apply an auction penalty to an amount equivalent to 120 % of the closing price on the date of sell trade.
Stock hits the lower circuit limit:
A stock hitting the lower circuit limit indicates that a trader will find only sellers and no buyers shall be available for trading.
Open Buy Intraday Position:
A trader will hold the open buy intraday position and incidentally, the stock hits the lower circuit limit.
By the end of Intraday trading you will have to square off the sell position because the trader entered and bought stock through the intraday.
As a result, the stock exchange immediately converts the intraday trade into delivery trade.
See lessWhat is 1 2 3 Trading Strategy?
1-2-3 Trading Strategy Mr. Victor Sperandeo made important observations in classic price patterns for treading reversals, and defined a 1-2-3 trading method. The trading pattern is formed based on the three consecutive price swings each swing stands higher or lower than the previous ones. The threRead more
1-2-3 Trading Strategy
Mr. Victor Sperandeo made important observations in classic price patterns for treading reversals, and defined a 1-2-3 trading method.
The trading pattern is formed based on the three consecutive price swings each swing stands higher or lower than the previous ones.
The three swings can be explained in this form:
The first swing number ‘1’ is the movement in the opposite direction of the existing trend.
The second swing number ‘2’ is considered as the correction swing.
The third swing number ‘3’ is the confirmation of the reversal and the beginning of a new trend.
The below diagram states the 1-2-3 trading setup and it aims at identifying a reverse bull trending to take a short position (buyback the shares).
To illustrate it you must carefully follow the schematic diagram in which, consider 1, 2, 3 as Pivot 1, Pivot 2, & Pivot 3.
Pivot 1:
It is in the highest point of the existing trend. It is here that the 1-2-3 strategy can be employed to derive profit from the reversal of the existing trend.
Pivot 2:
The stock price enters into retracement down in which, the stock price declines from the existing trend, or after a slight decline, the stock price experiences a short term rise.
It means, pivot 2 is the end of the retracement down, and if you observe the break of major bullish trend lines, they will definitely be a reflection of the bearish momentum.
Pivot 3:
The short term rise of the trend makes collapse and then remember the point must never be higher than Pivot 1.
In such a case, the trend is said to be significantly influenced by the bearish notes and as and when the market breaks below the level of Pivot 2, you must enter the short position.
Consider the Pivot 3 as the stop-loss for the ongoing pattern.
See lessWhy am I Losing Money in Intraday Trading?
Reasons Why Intraday Traders Lose Money in the Stock Market When you raise this question, ‘why am I losing money on intraday?’ then you must learn the sensitivity of the trade and sensibility that you need to maintain throughout the Intraday. Still, by the end of the read you too will carve yourselfRead more
Reasons Why Intraday Traders Lose Money in the Stock Market
When you raise this question, ‘why am I losing money on intraday?’ then you must learn the sensitivity of the trade and sensibility that you need to maintain throughout the Intraday. Still, by the end of the read you too will carve yourself to make more money than losing money on Intraday, so stop worrying !
You need to just follow the guidelines mentioned below such as well planned trading strategy, best alternatives, risk management, leverage, stop-loss, & lack of technical analysis.
Guidelines to Avoid Losing Money in Intraday:
You should be more cautious while you are a participant in a stock trading scenario, and be absolutely active while doing a trade on intraday rules.
Be sensible, remember, you are into stock trading only to make money by applying the predefined well planned trading strategy in the form of a trade plan for the day.
In case your strategies turn down your trading approach in the stock market then find the best alternatives and exit the trade positions. All this, just to avoid losing money on Intraday.
A Word of Caution:
Never move forward to participate in vengeance trading to gain control over the incurring losses. Instead, stay cool , appreciate the loss and willfully withdraw from the trade. You need to maintain patience and control your emotions.
Functionally, you must realize when to trade and when to keep away from stock markets although the fundamental rule says as the share prices rise you need to buy and as they begin to fall, it is time to sell out by executing exit positions.
You need to strictly practice risk management, for instance, It is a situation where you have to buy and sell the stocks on the same day and if you are about to incur losses then you can make an attempt to reduce it by converting the shares into deliveries. This sounds funny, but a change in your trading strategy in times of crises is never an issue to bother.
Utilizing Leverages
Stock brokers provide leverage on your trading capital, it goes up to five times the trading capital, you must be careful in opting for it. It is very tempting to make higher investment on your selected stocks through leverage, if chosen, you can confront risk on trade in a time when the stock trend movement is unfavorable to your trading strategies.
In case your trade goes upside down, you will have lost a part of your trading capital, and also make a payment of the leverage taken from the stock broker.
In an intraday trading session, the trailing of the stock prices can cause an immense loss on your investment. In such circumstances, the stock market has provided a mechanism to limit the losses, known as stop-loss. When the share prices touch the set limit value, the stock market sells the share thus protecting further loss.
Another reason for encountering loss in the stock markets is lack of technical analysis. The candlestick charts provide information to identify entry position, exit position, and the patterns help to exploit the bullish/bearish markets.
With no prior knowledge, you will find it difficult to cope up with the trading signals and at some point while trading might lose money in intraday.
See lessWhat is the 3-30 Formula in Trading?
3 30 Formula in Trading Application of the 3-30 formula helps you in identifying the market trends and to obtain the desired results, you will have to combine price action and moving averages. For the identification of the right direction of the market, you will have to involve a 30-minute candlestRead more
3 30 Formula in Trading
Application of the 3-30 formula helps you in identifying the market trends and to obtain the desired results, you will have to combine price action and moving averages.
For the identification of the right direction of the market, you will have to involve a 30-minute candlestick chart and deploy three moving averages. Furthermore, the market trends can be realised by relating the moving averages, and the price.
The 3 30 formula strategy is applied for the bank nifty index. And, below are the ways to study the candlestick patterns that show the price and the lines that move across the chart for the exponential moving averages.
When the price of the stock and 3-EMA have a sufficient gap then the strategy fits into, and swings in that gap.
Gap gets established between 3-EMA and the price, and steadily makes the investor take the following steps.
The investor will intend to buy or sell the stock and for that the 3 30 formula analysis defines certain facts.
Selling Scenario:
If the 3-EMA follows below the price, then the investor shall get to see the gap between the 3-EMA and the 30-minute candle.
One can find a first green candle, second green candle, and a hammer pattern.
It means, the strategy begins to trade, and an investor can enter into the low of the candle, and the applied stop-loss will have to be high.
Buying Scenario:
If the 3-EMA moves above the price, then you can find a gap between the 3-EMA and 30-minute candle.
An investor will observe a red candle , 2nd red candle, and a hammer pattern. The investor shall make an entry in the high of the candle and the stop loss will be low.
See lessCan I Use Intraday Profits on the Same Day?
Intraday Profit Settlement Time Intraday Profit is the most important query among the intraday gainers as they ask, ‘Can I use intraday profit on the same day?’ No, you are not allowed to utilize the profit earned on the Intraday investments on the same day. Technically, SEBI has set up a restrictRead more
Intraday Profit Settlement Time
Intraday Profit is the most important query among the intraday gainers as they ask, ‘Can I use intraday profit on the same day?’
No, you are not allowed to utilize the profit earned on the Intraday investments on the same day.
Technically, SEBI has set up a restriction on such profit earnings for your reinvestment on the same day.
Instead, you can opt credit from your stock broker through a leverage to continue your trading on the day you earn profits.
Then, the question that arises is when will the profit be credited into your trading account? In the coming up lines, you can have a glimpse as to how your profits are credited.
New Guidelines for the Credit of Intraday Trading Profit:
Important Note:
Way back on March 10, 2021, SEBI made it compulsory to block the trading profit and get it released only on the following day by 03:30 pm.
In intraday trading, you can make multiple trades within a trading day but have to square off your positions before the end of the day. This means that when you select intraday trading as the order type, you have to sell the shares that you have bought on the same day and vice versa.
Let me illustrate,
Limitations of the Intraday Profits:
You are free to execute multiple trades in Intraday trading sessions, and those trade positions must be squared off before the end of the closing session.
Similarly, you will have to buy back the share put for sale on the same day trading.
You can adopt the margin amount procedure provided by your stock broker and set it in a buy position in which you will be making a payment of only a fraction of the total transaction value. Here, too, you will have to square off the set in order and book your profit.
In case you want to manage your losses then you can convert the loss to deliveries and take the existing business to the next day. However, this is not the subject of our discussion.
Practical Example:
On a day, say, you make two purchases at two different instances say, 1000 shares of XYZ limited @ ₹10 per share that sum up to ₹10,000.00, and then again 1500 shares of XYZ limited @ ₹15 per share that sum up to ₹22,500.00. Hence, the total investment made is ₹ 32500.00
You close the two trade positions, @ ₹20 per share that sum up to ₹ 50,000.00. The profit earned by the end of the day is (₹ 50,000.00 – ₹ 32500.00 = ₹ 17500.00).
The profit earned on the day is ₹ 17500.00 and that shall be credited into your trading account on the following day by 03:30 pm.
General Formulae:
Consider intraday trading day as ‘T’ and ‘T+1’ the day following it then, three scenarios arise,
If ‘T’ and ‘T+1’ are working days, then the profit earned (₹ 17500.00) on ‘T’ day will be credited on the ‘T+1’ day, by 3:30 pm, and until then your profit shall be blocked.
If ‘T’ is Friday and you earned a profit (₹ 17500.00) then this amount shall be blocked until Monday, 3:30pm, and then it will be released.
If ‘T+1’ is the non working day, then the earned profit (₹ 17500.00) will be blocked and it will be released whenever the next working day is.
See lessCan we Hold Intraday Stocks for Next Day?
Can I Hold Intraday Stocks to Next Day? Certainly not, you cannot hold intraday to next day because it doesn’t fit into the fabric of the intraday trading rules and regulations. It is quite logical to have a desire in holding your intraday stock to the next day when you find the option put can leadRead more
Can I Hold Intraday Stocks to Next Day?
Certainly not, you cannot hold intraday to next day because it doesn’t fit into the fabric of the intraday trading rules and regulations.
It is quite logical to have a desire in holding your intraday stock to the next day when you find the option put can lead to a heavy loss.
In day trading, if you delay in selling the intraday stocks with a fear of incurring losses, then the stock exchange will lay a penalty. Only alternative in such a scenario is to minimise the intraday trade loss through a possible means. Now, try to find an answer to the two questions below.
Do you want to avoid penalties on your exit position stocks?
Do you want an alternative way to protect your stock losses?
For both the issues you need not panic, a responsive stock broker like zerodha has a record of staying committed in providing stock market services.
Do stay connected and go through the following lines on Convert the Position Feature (intraday stocks to deliveries, & Vice Versa) to reduce financial losses in a day trade.
After taking on the responsibility of your stock trading, Zerodha team shall automatically square off the option put.
Zerodha team closes the exit position of your stock depending upon the kind of securities you are operating in the markets.
The stock markets have set the closing of the exit position for different categories of securities like equity/cash (3:20pm): equity derivatives (03:25 pm) : currency derivatives (4:45 pm) and for commodities (25 minutes prior to the stock market closure).
Zerodha shall auto square off your held stocks but charge you with an additional fee : INR 50 + 18 % GST.
Zerodha Converts Intraday Stocks to Deliveries:
For the purpose of applying the ‘position feature’ you can utilise the service on the kite platform, a mobile app, exclusively designed for their clients. Interestingly, the kite platform does not charge you with fees.
To minimize the losses on the traded stocks in intraday trading the best way is to convert the position feature.
What is a position feature?
It is a feature that allows you to switch your trade from intraday (margin intraday square off) to delivery (cash and carry) and vice versa.
Example,
Converting Intraday to Delivery:
Assume that you have bought (option buying) 100 stocks of the ONGC Ltd via intraday trade after the volatility settles down and decide to sell out (option put) in two to three hours then change your trade plan, i.e., keeping shares to the upcoming week to avoid a loss intraday or in anticipation of good news.
Advantages of Converting Position:
If you are trading stocks about to lose money in Intraday then you are recommended to convert your exit positions to delivery which means you are taking time to manage the losses.
If you have bought a delivery stock and found that the stock price will give high appreciation/spread of negative news of the stock, then convert the delivery to intraday and execute the option put (sell order).
If you have executed option buy and bought shares on intraday then with a positive news in air, can bring about a rise in share prices.
You can convert instantaneously from the intraday to delivery and the share can yield to more profits.
See lessCan I do Intraday Trading on Sunday?
Intraday Trading on Sundays & Saturdays No, Saturdays & Sundays are holidays, please read the content stated in the upcoming lines. It will speak on the different kinds of buy/sell orders you can place on a working day from 03:40 pm to 08:59 am of the next day. They can be termed as pre-markRead more
Intraday Trading on Sundays & Saturdays
No, Saturdays & Sundays are holidays, please read the content stated in the upcoming lines.
It will speak on the different kinds of buy/sell orders you can place on a working day from 03:40 pm to 08:59 am of the next day.
They can be termed as pre-market/post-market/after market orders.
Sunday is a week off and stock trading is suspended on this day. In fact, even, every Saturday is off for those stock markets operating in NSE/BSE.
As the Indian Stock Markets are virtually connected to the global stock exchanges, there too, the stock exchanges remain closed on weekend days.
You can name it as NASDAQ, Tokyo stock exchange, Shanghai stock exchange, London stock exchange, Hong Kong stock exchange and so on.
Important Note:
Apart from Saturday/Sunday you will find the markets suspended on important calendar dates, which are released at the beginning of every financial year.
A copy of the ‘Calendar Holiday list’ as it can save you from the embarrassment of making an attempt to trade on holidays.
However, I would like to provide the time table of stock market operations, and the timings of the various buy/sell orders on a working day.
Time table of Stock Operations @NSE:
Every day stock markets open by 09:30 am and closes by 3:30 pm, Monday through Friday.
The stock operations remain closed on Saturday/Sunday at NSE.
You will find trading continued for specific activities after the closing of stock markets at 3:30 pm as they differ with normal trading operations during active trading hours ( 09:30 am to 03:30 pm).
Timings @NSE to Perform Specific Activities (Pre-market Orders/Post-Market Orders/After Market Orders)
In the stock exchange, you can operate three kinds of orders, namely pre-market orders, post market orders, and after market orders.
Pre-market orders:
Every day between 09:00 AM and 09:15 AM, NSE opens the pre market session.
During the first 8-minute period, the stock exchange collects the order, modifies or cancels it. In this time frame of 09:00 am to 09:08 am, you can place limit order/market orders.
In the next time frame of 09:00 am to 09:15 am, new orders are not allowed, the placed orders belong to the equity segment only and the trades are confirmed after validating the collected orders.
Post-Market Orders:
The post market session begins at 03:40 pm and ends by 04:00 pm.
Investors can utilise this time frame of 20 minutes to buy/sell orders referring to equities in the delivery segment under the CNC product code.
Assume that the ONGC ltd share price closed at INR 150 at 3:30 pm, the stock exchange’s closing bell period.
You can buy/sell options at a price of INR 150 only.
After-Market Orders:
Investors can place orders in the equity segment at NSE, during a period between 3.45 pm to 8:57 am. For the F&O segment, an investor can place orders up to 9:10 am, and for the currency segment, the AMO is allowed from 3:45 pm to the 8:59 am of the following day.
See less