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How to Make Money in Intraday Trading?
Best Way to Earn Consistent Income from Intraday Trading Intraday trading requires not only money, but a combination of skills, strategy, and discipline to succeed. While there are no guaranteed strategies or indicators in day trading, here are some practical tips that will help you navigate the comRead more
Best Way to Earn Consistent Income from Intraday Trading
Intraday trading requires not only money, but a combination of skills, strategy, and discipline to succeed.
While there are no guaranteed strategies or indicators in day trading, here are some practical tips that will help you navigate the complexities of the Indian stock market and potentially earn income through day trading.
1. Learn & Practice:
Start by building a strong foundation of knowledge about the stock market, technical analysis, and trading strategies.
There are 1000+ online sources available to learn anything and everything about the stock market. The only thing you need is a burning desire to learn.
Here are some free online channels offering free knowledge out of their experience.
Also, there are free stock market ebooks available online, you can download it and learn.
So, nowadays everything is available online to learn, the only thing lacking is the desire to learn.
Most novice traders just watch 2 to 3 videos on YouTube and directly jump into the market with a goal of becoming the world’s best traders. Unfortunately, that is not going to work for more than 2-3 days.
2. Design Your Trading Plan:
Create a practically working trading plan that includes your risk tolerance, financial goals, and strategies.
Having a plan helps you stay disciplined and avoid compulsive decisions while trading.
Maintain a trading journal and note down the following
Monitor the journal closely and do not repeat the mistakes done in the past. This will give you a very good boost believe me.
3. Risk Management:
Set strict risk limits for each trade to protect your capital. A most common rule is to risk no more than 1-2% of your trading capital on a single trade.
This helps prevent significant losses and keeps you in the race for the long run.
Always maintain the risk-reward ratio of at least 1:1 or 1:2. If you maintain a 1:2 risk-reward ratio, even if you lose 50% of the trades, you will in the profit side.
Example: If your stop loss is about 1000 rupees.
Whenever you lose the trade, you lose 1000 rupees and when you win, you will get 2000 rupees if you maintain a 1:2 risk-reward ratio.
Even if things go wrong 50% of the time, you will get a decent return.
4. Start with a Demo Account:
Before dumping real money into the market, practice your strategies on paper trading sites and do trial and error.
This allows you to refine your skills and gain confidence without financial risk.
There are a few paper trading sites available, you can check them here.
5. Technical Analysis:
Technical analysis plays a vital role in intraday trading. Master technical analysis to identify trends, support, resistance levels, and key chart patterns.
Understanding technical indicators can enhance your ability to make sharp decisions.
6. Control Emotions:
Every trader must become a robot during trading hours. Means absolutely ZERO emotions.
Emotions can make you implement compulsive decisions. Develop the emotional discipline to stick to your trading plan, even when you lose.
Attend some online workshops or do some yoga practices to get emotionally stabilized.
7. Diversify:
Avoid putting all your capital into one stock/ position. Diversification can help spread risk and reduce the losses when things go wrong.
8. Learn From Mistakes:
Even if you have 20 years of experience in trading, still you must learn new things. The stock market is ever-evolving, and successful day traders continually update their knowledge and adapt to new market conditions.
Your earning goes down when you stop learning. Both are interlinked.
Apply these practically possible ways to become a successful trader in India.
See lessWhat are the Must Read Books of Stock Market?
Best Books for Futures & Options The following are one of the best books for futures and options in India. 1. Fundamentals of Futures and Option Markets: John C Hull Traders enter into the commodity markets. Their primary products are related to the field of agriculture, mining, etc., such as whRead more
Best Books for Futures & Options
The following are one of the best books for futures and options in India.
1. Fundamentals of Futures and Option Markets: John C Hull
Traders enter into the commodity markets. Their primary products are related to the field of agriculture, mining, etc., such as wheat, rice, gold, platinum, and other minerals.
The process of trading is similar to the way an option futures trading is conducted on companies’ stocks.
Traders can make use of the book, “Fundamentals of Futures and Option Markets‘ written by John C Hull, a reliable source of information.
A trader from this book can understand the Options, Futures and Risk Management better.
Being directly associated with the investment banking firms, John C Hull, does provide the best advice to his readers in various critical issues related to the Futures and options markets.
One of the important components in estimating the future options in the stock markets is the time value of options.
Note:
He made a vivid description on swaps and derivative instruments and the interest rate futures.
‘Fundamentals of Futures and Option Markets’ Journeys from First to Ninth Edition:
Further, over time, from the first edition to the ninth edition, the book has transformed itself into a best learning guide to the undergraduate students and the traders at stock markets.
In his initial editions Way back in 1991, in initial editions, the author did make student friendly reviews. Hardly calculus was introduced in the subject of discussion just to avoid confusion to the non-mathematical background readers.
John C Hull produced numerical examples on real-life situations just to guide students who were preparing for their specific purposes.
The book is a confluence of theoretical and real time practical aspects of futures options trading and finds its place to be bible in the hands of practitioners.
Currently (2023), the ninth edition of the book is in print, it offers a vivid, easy to grasp introduction into financial mathematics.
2. Trading Options Greeks by Dan Passarelli
The book ‘Trading Options Greeks’ written by Dan Passarelli does cover option trading in detail and provides extensive knowledge about it.
In fact, the book serves as an essential source of input and is highly educational to professionally driven traders in the stock markets. Dan Passarelli discusses the parameters that are inclusive in option trading both in educational and practical perspective.
The entire book portrays the practical experience obtained over years as a professional trader to benefit the young trading aspirants and his counterparts. Any aspirant can obtain the principles adopted by the veteran trader on the option trading in this book.
According to him, the main elements that create an impact on the option trading are the direction, time, volatility, interest rates and the dividends often denoted by Greek alphabets.
The analytics are explained in a manner that helps the traders overcome the complexities of option trading, thereby avoiding a debt trap thus resulting in making good money.
The book ‘ Trading Options Greeks’ has been forwarded by William Brodsky, Chairman & CEO of the Chicago Board Options Exchange ( CBOE).
Trading Options Greeks Details:
Stock markets are highly volatile and option traders have to maintain a highly practical approach and Dan Pasarelli has explained with the greek terminology, delta, gamma, theta, vega, and rho and says it is the best technique for evaluating the option trading irrespective of the market conditions.
In the second edition release, a reader will find these tools such as delta, gamma, etc., applied to evaluate the option trading to obtain a deep insight of the stock markets.
These Greek techniques enable traders to determine an accurate pricing and these analytics can further help traders in exploring a wide range of opportunities.
Trading Options Greeks in Nutshell:
The second edition of the book (Trading Options Greeks) contains new material that covers examples with newer market conditions.
The updated second edition has the inclusion of advanced option trading and more information on spreads, trading volatility, put-call parity, and synthetic options.
The options trading analytics expose the best means to explore dynamics of option pricing and take the trading to the next level.
The readers will realize that to have long term options trading go high they must seek a comprehensive understanding of the greek techniques.
The book provides a better understanding of the Greeks and the effective management of the stocks at options trading to make higher profit margins.
See lessWhat is Option Buying and How Does it Work?
How does Option Buying Work? Option Buying: If you are planning for the purchase of stocks in share markets it can happen in this manner. In option contracts, you can derive your buying/selling options by applying option strategies to make maximum profits as per your trading plans. Fundamentally, yoRead more
How does Option Buying Work?
Option Buying:
If you are planning for the purchase of stocks in share markets it can happen in this manner. In option contracts, you can derive your buying/selling options by applying option strategies to make maximum profits as per your trading plans.
Fundamentally, you will find four kinds of option strategies employed by stock exchange traders/investors. To obtain better results in the buying of stocks of the underlying assets, you can adopt option long call, option short call, and option long put in the option buying strategies. Below you will find me explaining the long call option in short.
When employing the strategies to meet your trading plans you must know the risk profiles involved while implementing the four basic options. They are ‘buying a call,’ ‘buying a put,’ ‘writing a call,’ & ‘writing a put.’ They can be described in brief.
Buying a Call:
In this case, the common notion is, the stocks will rise thereby representing a bullish trend. In such a scenario, the risk is limited to the premium paid and you can seek maximum rewards if you are involved in ‘buying a call.’
Buying a Put:
In this case, you will proceed to buy a put only when you observe a bearish outlook. Here too, the risk is limited to the premium paid, you can gain maximum rewards until the strike price of the underlying asset is less than the premium paid.
Writing a Call:
In such a situation, the stock will fall showing a bearish outlook and maximum rewards shall be limited to the premium received. When the stock price rises, you can encounter an unlimited potential risk. When a risk arises you can combine with another position to limit the risk.
Writing a Put:
You will execute a put option with a faith that the stock will have a bullish approach. In this case, the risk is unlimited to a maximum to an extent of the strike price less the premium received. You can seek a maximum reward that is limited to the premium received. You can opt to combine with another position to limit the risk.
Trading a Long Call:
Long Call is an option to buy and when you do so, you will also anticipate the underlying share price to rise.
You may prefer to buy an option contract or S&P future options, then you need to step in to purchase stocks and step out by selling those stocks to generate adequate profits.
For instance, in the NASDAQ, one contract is for 100 shares and the price of 1.00 dollar per share is applicable, therefore you will have to pay 100 dollars per contract. While in case of S&P future options, you will have to make 250 dollars for one future contract when exercised and each contract comprises 100 shares.
Step-in Long Call Trading:
You must step into a long call trading, when the stock market trend is upward, and has a support.
Step-out Long Call Trading:
You must step out, that means, sell your long options before the final month before expiration just to avoid the effects of time decay.
In case, the stock triggers down below the stop loss, then the best way to limit the loss is to sell the calls.
Stock Selection/Stock Sell-out Period:
You must select the stock that holds adequate liquidity somewhere like 500,000 average daily volume (ADV).
When selecting the option, the open interest must be from 100 onwards and 500 is preferable.
You must sell out at either the ATM (stock price equal to strike price) or ITM where the strike is below the current stock.
You must choose the option at least three months before the expiration date.
See lessHow to Analyse Option Chain?
How to read an Option Chain You have popped up a nice question on ways to analyse option chains. Such thoughts will arise only when you are determined to book profits in share markets. Let me tell you, having minimum experience in analysing option chains, I could make decent money in option contracRead more
How to read an Option Chain
You have popped up a nice question on ways to analyse option chains. Such thoughts will arise only when you are determined to book profits in share markets.
Let me tell you, having minimum experience in analysing option chains, I could make decent money in option contracts. Below I share a significant way of analysing option chains on Indian Derivatives.
Benefits of Option Chain Analysis
Usually before the begin of a trade, trader will apply option chain analysis methodology to derive specific aspects. They can be specified as:
Parameters to Analyse Option Contracts in Option Chain:
Charting: Charting is pictorial representation of the option contracts of an underlying asset and the charting techniques include bar charts, line charts, and candlestick charts.
Technical Analysis: By adopting mathematical and statistical modeling the technical analysis will help you in identifying stock patterns, and trends in the NSE/BSE markets.
The patterns include support, and resistance levels, trend lines and specific technical indicators that enable for better decision making on a trade.
Fundamental Analysis: The price of the options are highly dependent on the economic indicators such as company’s performance, reports, and news events. In fact, you will be able to define the intrinsic value of your chosen option that helps you to have accuracy in trading decisions.
Greek Analysis: It enables you in understanding the sensitivities of the options in respect to different market factors. These can be marked as asset price, volatility, and the time decay. When you adopt different trading strategies, greek options help you in making better informed decisions.
Implied Volatility Analysis: It helps you in identifying mispricing in the option markets and from which you can design newer strategies to encounter it.
Options Spread Analysis: It involves the examination of the prices of different options for the same underlying assets. From it, you will be able to identify opportunities for trading spreads like horizontal/Vertical/Diagonal spreads.
Option spread analysis will enable you in limiting the risk factors and improvise the profits in different market conditions.
Summarize:
I am hopeful that you could understand the outlines of the option chain analysis and path incorporated in the analytics.
However, in nutshell, by adopting the option trading analysis, you will be able to identify the trading opportunities, adopt better risk management, and gain a better understanding of the ongoing market behavior.
In the end, you will be able to enhance your trading potential in the stock market scenario.
See lessHow does an Option Chain Work?
Know How Option Chain Works in India You have posted a wonderful query, interested to learn about the option chains work? With my experience I would like to describe the usual process involved in option chain analysis that in turn should define the option chain working. How does an option chain workRead more
Know How Option Chain Works in India
You have posted a wonderful query, interested to learn about the option chains work?
With my experience I would like to describe the usual process involved in option chain analysis that in turn should define the option chain working.
How does an option chain work in stocks
Before getting into the crux of the matter, you must understand the elements that abide by the making of the option chain and more importantly, what is the option chain matrix as such.
An option chain contains a table of information divided into two sections namely calls and puts. The two communities, namely buyers and sellers of the underlying assets, take the respective information from the option chain matrix and arrive to make judgements on buying and selling issues.
Certain elements in the option chain matrix become important inputs to engage in buying/selling of option contracts. You can find those to be premium, strike price, expiry dates, open Interest, change in open interest, implied volatility, LTP, Net change, bid quantity, bid price, ask price, & ask quantity.
I would like to cite an example to make you understand how option chains work by applying it to Bank Nifty Options.
Bank Nifty Option Chain:
Source: NSE on 25 August 2023
The sample copy represents option contracts of bank Nifty and the set date of expiry is 31-Aug-2023. If you pay attention to the columns of the table, you can find all the elements described above, segregated into calls/puts.
If you are planning to go for Bank Nifty options then the tabulated nifty options chain data can help you to interpret several aspects such as:
The Bank Nifty option chain generates a clear dimension of, in the money/out of the money options. Wherever you find the strike shaded in yellow then it is in the In the Money (ITM) options, and the unshaded strikes are the out of the money (OTM) options. when the spot value of the Nifty changes, the shading does change correspondingly. Therefore, you can utilise this observation as a rule to the calls/puts.
You can make a proper evaluation of the liquidity and depth of the strike price.
Elements like bid/ask price and quantity provides sufficient info for the traders while they progress to apply the OTM options as the liquidity is pretty low in such cases.
In the index markets, the Bank Nifty option chain provides an early warning system through sharp moves or break outs in the index.
In an empirical test, if you observe a major change in Bank Nifty then its impact is observed in the Open Interest, and the volume shifts. However, the occurrence of Bank Nifty changes are due to the active participation of the FIIs, mutual funds and institutional investors.
Traders can position their trades accordingly with an abrupt shift in price/Implied Volatility of the underlying assets. Thereby, price/implied volatility can be viewed as an important parameter to alter trade positions.
See lessWhat is an Option Chain?
What is an Option Chain in Indian Stock Market: Option chain is a collection of information made available in a tabled format. In fact, whenever I decide to execute a call or put in an option contract, the option chain tabular form becomes valuable information on trade analytics. Everytime, when I bRead more
What is an Option Chain in Indian Stock Market:
Option chain is a collection of information made available in a tabled format. In fact, whenever I decide to execute a call or put in an option contract, the option chain tabular form becomes valuable information on trade analytics.
Everytime, when I begin to analyse the underlying asset, I seek the help of the option chains. I would like to list a few option chain tools which you may find suitable for you as well, and they are NSE Option Chain, Sensibull, or Nifty Trader.
From the above said, one thing I made clear is, take the help of Option Chain to make better analysis on your chosen security. Now, let us move further and see what the option chain comprises.
These option chain tools publish information on parameters like open interest, change in open interest, volume, volatility, option greeks. These parameters are dependent on the select strike price and the specific expiration date.
For instance, option chain tools give striking information for the underlying asset like banks, technology, pharmaceuticals, etc when such a category is selected for the desired option chain table.
Features of Option Chain
Please go through the characteristic features of option chain as mentioned point wise.
Example of Option Chain (National Stock Exchange):
Steps to Operate the NSE Option Chain Tool:
You will have to decide whether you want to gather option chain info on equity stock, currency, interest rates, or commodities. Then click the concerned knob.
In the example, I have clicked the equity stock tab, therefore it will lead to a display of four parameters, view options contracts for, or select symbol, expiry date, or strike price.
You can see that I have opted for the select symbol and chosen Axis Bank and likewise I selected the strike price option, at INR 780.00 and you can find a display of the filtered parameters.
For the chosen strike price, you can wait for the call option on two different expiry dates, 31 August 2023, or 28 September 2023.
You can correspondingly see bid quantity, bid price, ask price, bid quantity, and so on. You can decide on the call option (buying equity stocks) depending upon your convenience from the created option chain table.
See lessAeroflex Industries IPO Details?
Aeroflex Industries Limited | IPO Details Company Introduction: Manufacturer of a multipurpose application of metallic flexible flow solutions, the company is fast scaling new highs year on year and here are the reasons behind that you should not miss to read it. Aeroflex Industries Limited has recoRead more
Aeroflex Industries Limited | IPO Details
Company Introduction:
Manufacturer of a multipurpose application of metallic flexible flow solutions, the company is fast scaling new highs year on year and here are the reasons behind that you should not miss to read it.
Aeroflex Industries Limited has recorded the total revenue, a new high every year, for instance, in FY 2023 the company has recorded a total revenue of INR 2964.78 Lakhs, and in FY2022 it noted a total revenue of INR 2409.92.
The company displayed an interesting figure of 1,700 product Stock Keeping Units in its product portfolio as on March 31, 2023. Attaining such a good performance was the result of the adoption of an environment friendly metallic flexible flow solution products in manufacturing and supplying those to their esteemed clients.
Another noticeable fact is that the metallic flexible flow solutions produce a multipurpose application and over time are replacing the conventional rubber, polymer pipers and tubes.
Based on this advantage, the company is rapidly advancing in its business operations and the yearly measure of progress can be evaluated in the consolidated financials for the past four years. However,the company wants to expand its capital base through public funding as a part of the expansion phase of the company.
The following paragraphs deal with various segments that signify the need to buy the shares in the IPO primary share markets. It does include the strengths of Aeroflex, Objects of the IPO fund, IPO details, IPO event calendar, consolidation of five year financials and key performance indicators.
Strengths of Aeroflex:
Aeroflex Industries Limited holds a good track record on exports of the metallic flexible flow solutions under “Make in India”. The company exports the Aeroflex products to over 85 countries that generates a revenue of more than 80 percent of the total value.
The Aeroflex solutions have made their presence in different areas of operations such as space, aviation, and fire-fighting equipment. These metallic flexible flow solutions have recorded multipurpose applications and their utility does replace the utilisation of rubber, and polymer pipes and tubes.
Employees are benefited with a dividend distribution of about 7 to 15 percent as per the information in the offer document and it has become a custom for the past two years.
Objects of IPO Fund Utilisation:
As per the Red Herring Prospectus Document, RHPD, a little portion of the capital fund will be utilised to make a prepayment of INR 35 crores of the outstanding in regard to the borrowings.
A significant portion of the IPO fund shall be invested on working capital needs up to INR 84 crore.
A part of the fund will be utilised to manage and maintain the general corporate purposes, & acquisitions.
Aeroflex IPO Details:
The promoters of Aeroflex Metallic Flexible flow solutions Ashish Kacholia, and Jagdish Master filed an IPO application to the SEBI regulatory authorities for the approval of the IPO in the month of March 2023.
SEBI regulatory authority gave approval to float an IPO issue worth INR 350 crore of which the fresh issue will be equity shares worth INR 160 crores and the Offer for Sale will be 17.5 million equity shares.
The IPO issue will comprise fresh issue and offer for sale, OFS, with each share possessing a face value of INR 2.00.
The company reserves an IPO issue quota for the various segments like retailer, QIB, and NII(HNI) in the following manner.
The share offers to the retailers shall be limited to 35 percent of the net offer, for the NII ( HNI), the share offers will be over and above 15 percent of the net offer. Likewise, the shares offered to the QIB segment will be equal to or below 50 percent of the net offer.
The price bandwidth of the share price is between INR 102 and INR 108 and the lot size will be 130 shares.
A retailer is allowed to purchase a minimum of a single lot equating to 130 shares and the amount aggregating up to INR 14,040 and the maximum lots of 14 aggregating to INR 196,560.
For S-HNI minimum lot will be 15 aggregating to INR 210,600 and a maximum lot of 71 aggregating to INR 996,840 and B-HNI minimum will be allowed to purchase a single lot size of 72 that equates to 9,360 aggregating to INR 1,010,880.
The total issue of the shares will be 32,500,000 which aggregates to INR 351.00 Cr, fresh issue 15,000,000 shares aggregating to INR 162.00, offer for sale shares will be 17,500,000 aggregating to INR 189.00 Cr.
In the pre issue period, the promoters will be holding 114,320,370 shares and after the IPO issue listing, the shares will rise to a figure of 129,320,370.
IPO Timetable:
The company shall open its IPO issue to the general public on Tuesday 22 August 2023, and the closing date will be Thursday, 24 August 2023.
The allotment of the shares to the applicants shall begin on Tuesday, 29 August 2023.
An applicant may not be able to seek an allotment due to oversubscription then the National Stock Exchange, NSE, or the Bombay Stock Exchange will initiate to refund the collected funds from Wednesday, 30 August 2023 onwards.
After the share allotment, they shall be credited to the applicant’s demat account on Thursday. 31 August 2023. And, on Friday, 01 September 2023, the stock exchange shall list the issue company’s IPO.
Key Performance Indicator:
The IPO prospectus book does mention the parameters that act to be performance indicators which enable an applicant to decide whether one can opt for IPO issue or not. They are Market Capital ( INR 1396.66 Cr), ROE(26.43%), ROCE(31.91%), and Debt/Equity(0.39).
Consolidated Financials for 4 years (2020 to 2023)
About Aeroflex Industries Limited
Location/Infrastructure
Began in 1994, Suyog Intermediaries Private Limited renamed as Aeroflex Industries Limited later. The company is located at Taloja, Navi Mumbai, Maharashtra, and holds a premises of 3,59,528 square feet.
Product Profile:
The company does manufacture a host of products like solar hoses, vacuum hoses, interlock hoses, braided hoses, unbraided hoses, and gas hoses. Other manufactured products are hose assemblies, lancing hoses assemblies, jacketed hose assemblies, exhaust connectors,exhaust gas recirculation (EGR) tubes, expansion bellows, compensators, and related end fittings.
Clientele Spread in Business:
The company serves clients belonging to different segments such as distributors, Maintenance Repair and Operations Companies (MROs), Original Equipment Manufacturers (OEMs), fabricators, and to those companies which operate in a wide range of industries.
See less