Big boys play in intraday trade. Common investors should not venture into it – the country’s capital markets regulator the Securities and Exchange Board of India has said in no uncertain terms.
As the name implies, it involves buying and selling securities in the space of one trading day. Therefore, quick and correct decisions are a must to make profits.
Prerequisites for intraday trade
Being well-versed in market trends and technical analysis are the two prerequisites for the art of managing money under rapidly changing circumstances. Isolating the appropriate stocks from a huge pool is also a great skill.
To drive home the dangers of intraday trade by the common people, SEBI has come out with a report that says more than 70% of individual investors in this domain suffered an average loss of Rs 5,371 in FY23.
Huge sample size
This study was conducted with a sample size of nothing less than 70 lakh in the cash segment.
That the volume of intraday trades has reached alarming levels can be gauged from the fact that about one-third of the average daily trading turnover for the cash segment of Rs 1.5 lakh crore is due to intraday trade.
Awareness needs to rise
“The study is expected to enhance awareness among individual traders about the risks involved in intraday trading in the equity cash segment,” the market regulator said in a press release.
“Intraday trade is for seasoned traders. Common investors, especially young ones, have thrown caution to the winds and started intraday trades that are extremely risky, to put it mildly,” said a senior official of Monarch Networth Capital.
Rise of young traders
Taking 30 years as the cut-off age of a young trader, SEBI revealed that their share has grown to almost half – 48% in FY23 – from a level of 18% just four years earlier in FY19.
Significantly, with the surge in the number of intraday traders of small sizes, the average size in this segment has gone down in recent years – from Rs 76,205 in FY19 to Rs 35,333 in FY23.
Women wiser, share dipping
However, the share of women participating in intraday trades is going down as a share. While their share was 20% in FY19, it has dipped to 16% in FY23.
Investors are falling prey to the pure faster in Tier-I, Tier-II and Tier-III cities, where the participants have multiplied by 3 times, 5 times and 10 times respectively between FY19 and FY23.
Like Futures & Options, the lure of making quick profits is trapping more and more youths in the risky zone of intraday trading. Many are rushing into the game which is actually meant for hard-nosed traders and experts who can identify short-lived trends from the surrounding noise. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
