Intraday Trading on Zerodha

It’s been a long time since I wrote something here. So I have been buying CNC(Cash N Carry) stocks for a while. I currently have 14 stocks that are doing well. I always have at least 4 stocks wihtout any profit. I have written about it in the last post.

Read: Started trading on stock market!

Holding on to these stocks is good if I’m expecting long term gains. When I have stocks from 14 different companies, I don’t have to worry about the loss because at least a few of them perform really well(this is where your research helps).

I wanted to try intraday trading. I knew Zerodha offers that but did not know how to do it using the web app or the Pi application.

What is Intraday Trading?

Trading the same day is called Intraday trading. So when I say trading it is complete trading. If you buy X number of shares, then you should sell all the X number of shares the same day.

Why Intraday Trading?

Intraday is lucrative because we can use something called MIS(Margin Intraday Square-off) where we can buy more stocks even if we have a fraction of the money. But the condition is that we have to square it off the same day. Which means, if we buy 100 shares of a company then we should sell 100 shares the same day before the market closes (Usually 3:20 pm in India).

I would like you to know that intraday is not that hard as some experts put it. But there is the risk of losing all your money! So a careful investment will not cause you much harm.

How to do Intraday Trading on Zerodha

I would suggest you to use Pi application for this process. You can also do it over web app but I think the PC application is faster and reliable.

Understand the Candle

We usually perform intraday trading using a chart (I prefer 1min or 5min). So a candle sticks help you understand the changes that are happening in the value of a stock.

Zerodha Intraday Trading Candle Stick chart

This is a candlestick chart. Below image shows the details.

Candle stick basic chart

source: Online Trading Concepts

Basically, green candlestick indicates that the stock value went up. The length of green candlestick indicates the exact value that went up. The reverse is true for red candle sticks.

Long

You may have seen traders using the term like “I’m going long” which basically means that they are buying stock at a lesser price to sell it later for a higher price.

Stock market going long

Short

Shorting in stock market is just the opposite of long. Sell the stock at a higher price and buy it later for a lesser price.

Stock market going short

Calculation of Profit using Margin and Brokerage

Before you buy and sell a lot of shares, you should know how much you will actually make. This is where the below calculation helps you.

Since I’m using zerodha, I will show you how to calculate margin and brokerage in zerodha. If you are using other platforms then you might find particular calculators.

Margin Calculation

Margin calculation helps us to estimate how many stocks we can buy.

Log on to Margin Calculator. You will see all the companies listed there with the MIS multiplier.

Margin Calculator Zerodha

Now select the stock you want to check the margin of. I will be choosing SBIN(State Bank of India) which has a 14x multiplier. That means that I can buy 140 shares with 1000Rs in the account if one stock costs 100Rs. So instead of 14,000Rs, I’m paying only 1000Rs!

This is where you can make the most of it. Though you don’t have a large sum of money to invest, you can always start with a lesser amount say, 5000. Be ready to loose it if things go wrong!

Now let’s calculate. The current price of SBIN stock is 280. Let’s enter that and the amount we would like to invest.

Margin Calculator Zerodha

Now, it shows that we can buy 255 shares which actually costs 255*280 = 71,400Rs for just 5000! Because SBIN stock has an MIS multiplier of 14.

Brokerage Calculation

Brokerage helps us to find how much profit we will make after all the charges by the platform and taxes.

Log in to Brokerage Calculation

Brokerage Calculator Zerodha

So that last amount 215Rs is our profit if we sell the stock at 281 which we bought at 280.

Simple isn’t it??

Now open Pi, Add SBIN in the Market Watch window

Intraday Trading on Zerodha Pi

Now right click on the stock and select chart. Select a chart of 1min. Then you will see something like this.

Intraday Trading candle stick chart on Zerodha Pi

Next, right click on a value where you think you want to buy the stocks and right click. A menu will show up like this

Intraday Trading buy stock on Zerodha Pi

Select Buy@280(the value can be different). Buy at most 255 shares(Choose less if you are just testing).

Now select a higher value, right click and select Sell@281(the value can be different). Sell a part or the whole of 255 shares.

Once a buy or sell happens, a voice assisted notification will be announced in the app. This helps me when I’m away from the computer after setting the buy/sell values.

So that is it! I hope that helped you in some way to start off with intraday trading online. I will be writing more on this soon.

I haven’t discussed short selling, where we sell what we don’t have when we know that a stock goes down. But we will buy the same amount of stocks once the value goes down. I will write about it in the coming posts.

So in stock trading, we can make profit on both positive and negative curves. If you think the curve is going to be positive(upwards), then you should buy first and sell later. If you think that the curve is going negative(downwards), then you should sell first(even you haven’t bought any) and buy later.

Stop Loss

Stop Loss is a key factor that saves you from loosing all the money. Stop Loss helps you if the curve is not going as you expected.

Imagine you have bought shares of SBIN for 280 Rs. You are expecting the stock to go up, but unfortunately it doesn’t and keeps going down(this can happen in major events like demonetization, Brexit, war etc.,). Now Imagine if it reaches as low as 100 and doesn’t come back up the whole day. Which means that you have made a huge loss.

Always set a stop loss where you think you can handle the loss. I would set a stop loss at say, 278. So if in case the curve starts going down and touches 278, then all the stocks will be sold at that moment. Though you are making a loss here, it isn’t a huge loss.

To set a stop loss, you should buy using Cover Order.

Cover Order Set Stop Loss on Zerodha Pi

When you are buying or selling, use cover order or bracket order(I will explain this in the next post). That way you will minimize the risk.

Example

Here is what I made on the first day of Intraday Trading on Zerodha. Not much but a good start, I believe. If 10 trades of this kind can be made in a day then you can easily make 1000-1500Rs/day which is pretty much the salary of a fresher software engineer.

Intraday Trading Example Zerodha Kite

I bought 300 shares for 283.6 and sold 300 shares for 284.25. It is a very less change but that led to a profit of 147 Rs. And two other shares. So a total of 207 Rs in a day.

Finally, what I suggest is that don’t be too greedy. Try small profits. Maybe once you understand the market go for bigger investment and profits.

Thanks for reading!

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