3 Easy Steps to trade in F&O (Equity Future Derivatives) at BSE, NSE, MCX

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The Indian Trading League team has an endeavour to empower every investor and trader in the country to do better in the markets. We have a philosophy to what is trading on equity in hindi people to invest and trade methodically and not recklessly.

With this in mind, we are outlining some guidelines that investors and traders across the country should follow since after all, it is your hard earned money and it should be channelled wisely. Some of the thoughts mentioned herein have been uttered by the greatest investors and traders in the world. The markets are a brain game Like Chess or like chasing a cricket match in the second innings and to win this game, you will need to create a plan.

The most important thing will be to follow the plan religiously and not deviate from the same. What should your plan have. Defining how much to risk or how much to lose on a single trade is the firststep towards risk management. Based on the available trading or investing capital oneshould decide prudent limits one is comfortable losing, this is all the more importantbecause if one knows realistically the loss taking capacity, then trades will be donewithout FEAR of losing, and when fear is not disturbing, one can take decision from themind without any emotions attached.

Fear of LOSS is the biggest hurdle in trading andinvesting and the only way to overcome is pre what is trading on equity in hindi the risk rules in the form of losslimits. Size of the Trade: Too often people, either, bet everything on one trade and go broke orbet too little to make any meaning full profits to remain in the business. Both will drivethem off the markets. In the first case there will be too much emotional attachment orthe greed, but when the trade goes against, it will be hard to press exit button and what is trading on equity in hindi broke because the position was huge.

On a trading capital of sayRs 1 lac, one can afford to lose max Rstherefore say for example ACC is trading at and stop loss is identified attherefore max loss per share would be For capital of Rs. The above rules are notmathematical rules of exactness, but suggestive and are followed elsewhere as bestpractices in the industry. In trading one must have an exit strategy, i. Indecision will not help. Some have pre defined profit target of three times riskfor example if risk per trade is assumed at Rs.

Similarly there are different waysof exiting the trade, it is essential to have the exit strategy in place before entering thebattlefield called the stock market. In trading this is even more importantbecause leverage is used.

One generally keeps a stop exit when price adversely moves beyond say 2 times Average true range ATR or crosses key support or resistance areas. Whatever may bethe strategy it is a must to exit a losing trade. Every time no one is right all the time.

Trading or Investment, both require different set of skills, mental attitude, and divergent rules. In order to be best in the class, one can therefore either be a Trader or an Investor.

The important decision making points wherein strategy differs are Stop Loss or hold on, long term or short term, analyzing price or analyzing value, to follow the market or to predict are some of the contrasting and opposite action points which needs to be applied to either investing or trading to the exclusion of each other.

Markets are not one way up, after bull market, bear market is what is trading on equity in hindi to follow, so one should not be biased towards only long trades, selling short should also be done with the same ease.

By refusing to sell short one forgoes what is trading on equity in hindi opportunity to make money when the markets are in bear zone.

Always remember, money can be made in 2 ways a. Buying Low and Selling High! Selling High and Buying Low! The hardest thing in the financial markets is the ability to consistently execute the plan with the iron fist discipline, but which rarely happens and that is why results are what is trading on equity in hindi poor.

It is said majority of the people do not make money, because people lack discipline. Whoever does it has the riches. Trading and Investing are essentially interlinked with human emotions. It what is trading on equity in hindi human being that makes the decision but the emotions act as a gatekeeper which filters out decisions. Any money making skills has to be self acquiredno one can what is trading on equity in hindi depend on others, that they will make money for them.

Similarly by depending on forecasters one constantly postpones efforts to self learn the art of making money through hard work and self study. There what is trading on equity in hindi no substitute for self acquired knowledge and experience. You will have to write your own exam in the markets. No amount of copying, cheating will help you ace the exam! The economics of profit is simple, reduce costs, profits will automatically increase, other things remaining same.

The flat fees of Rs. This may seem irrational but it is possible because of advent of technology, businesses are now becoming digital driving down their cost of operations dramatically. The flat fee brokers like SAMCO are just passing on the benefits of cost reduction at their end which every trader and investor must avail off in order to reduce costs and increase profits dramatically. It is far more difficult to swim against the flow of the what is trading on equity in hindi, but very easy to flow with it.

Similarly once the phase of the market is identified bull or bear, then one should trade or invest in that direction. Also, it is not necessary to trade compulsively all the time. More trading doesn't mean more return. In fact, there goes a saying by Mr. Warren Buffett, "As investor motion increases, return decreases". Sometimes if there is no clear trend in the markets, it might be better to be a spectator than be a compulsory speculator. Like many things in life, simple and uncomplicated things are more effective, similarly in trading or investing, the strategy should be simple and easily understood.

The rules of entry exit, the risk management policies, discipline to stick to the plan and the ability to control emotions are the key to success. There is no other rocket science to success in the markets. We'd like to close with a Peter Lynch Quote - "Everyone has the brain power to follow the stock markets. If you made it through 5th Standard Math, You can do it. We believe all our participants will cross new frontiers and reach new highs in their ability to make money in the markets.

Team Indian Trading league wishes them all the best in their endeavours. These Terms of Use "Terms" apply to the web sites, web pages, interactive features, applications, widgets, blogs, social networks, social network "tabs," alternative reality worlds or features, or other online or wireless offerings that post a link to these Terms, whether accessed via computer, mobile device or other technology, manner or means each, a "Site," and collectively, the "Sites".

These Terms govern your rights and responsibilities in connection with the particular Site you are using referred to sometimes as "the" Site. The term Site includes the content on that Site, all of our services provided on or through that Site the "Site Services"and any software that we make available on or through that Site the "Software"unless otherwise specified.

These Terms constitute a legally binding agreement between You and SAMCO regarding your use of the Site and the services that allows for the distribution and reception of video, audio, and other content through such Site. Do not use the Site if you do not agree with any of the terms contained herein. Given the nature of the Internet, even though the Site is ordinarily but not what is trading on equity in hindi targeted to Indian "India" residents, it may be accessed in other parts of the world.

If you are not a Indian resident and yet use the Site, you acknowledge, understand and agree that you are doing so on your own initiative and at your own risk and that it is your responsibility and not ours to make sure that your use of the Site complies with all applicable local laws in the jurisdiction from where you access or use the Site. Changes to these Terms or the Privacy Policy will be effective when posted. You agree to review these Terms and the Privacy Policy periodically to become aware of any changes.

What is trading on equity in hindi use of the Site or any part thereof after any changes to these Terms or the Privacy Policy are posted will be considered acceptance of those changes and will constitute your what is trading on equity in hindi to be bound thereby. If you object to any such changes, your sole recourse will be to stop using the Site. All Special Rules are incorporated into these Terms as if fully set forth herein.

Check later for updates. How to Trade in Indian Stock Market. Make a Plan and Follow it religiously. They only fill your ears, not your wallets: Investments are subject to market risks. Please read the Risk Disclosure Document carefully before investing. Issued in interest of Investors.

The Stock Exchange dispute resolution mechanism as well as investor grievance Redressal mechanism administered by Stock Exchanges will not be available for disputes relating to the competition. Click here to refer full terms and conditions.

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You can classify yourself as an Investor if you hold equity investments for more than 1 year and show income as long term capital gain LTCG. You can also consider yourself an investor and gains as short term capital gains STCG if your holding period is more than 1 day and less than 1 year.

In this chapter we will discuss on all aspects of taxation when trading is declared as a business income, which can be categorized either as:. Unlike capital gains there is no fixed taxation rate when you have a business income.

Speculative and non-speculative business income has to be added to all your other income salary, other business income, bank interest, rental income, and others , and taxes paid according to the tax slab you fall in. You can refer to chapter 1 for tax slabs as applicable for FY In order to find out my tax liability, I need to calculate my total income by summing up salary, and all business income speculative and non-speculative.

The reason capital gains is not added is because capital gains have fixed taxation rates unlike salary, or business income. Now, I also have an additional income of Rs. I hope this example gives you a basic orientation of how to treat your income and evaluate your tax liability. We will now proceed to find a list of important factors that have to be kept in mind when declaring trading as a business income for taxation.

If you file your income tax returns on time July 31 st for non-audit case and Sept 30 th for audit case, you can carry forward any business loss that is incurred. Speculative losses can be carried forward for 4 years, and can be set-off only against any speculative gains you make in that period. Non-speculative losses can be set-off against any other business income except salary income the same year.

So they can be set-off against bank interest income, rental income, capital gains, but only in the same year. You carry forward non-speculative losses to the next 8 years; however do remember carried forward non-speculative losses can be set-off only against any non-speculative gains made in that period.

In such case my tax liability for the year would be —. I have a non speculative business loss of Rs. If you incur speculative intraday equity loss of Rs. I can carry forward speculative loss of Rs. Also to reiterate, speculative business losses can be set-off only against other speculative gains either the same year or when carried forward.

Towards the end of a financial year you might have realized profits and unrealized losses. If you let it be, you will end up paying taxes on realized profits, and carrying forward your unrealized losses to next year. This would mean a higher tax outgo immediately, and hence any interest that you could have earned on that capital which goes away as taxes. You can very easily postpone this tax outgo by booking the unrealized loss, and immediately getting back on the same trade. By booking the loss, the tax liability for the financial year would reduce.

We at Zerodha are the only brokerage in India presently giving out a tax loss harvesting report, which will spot all opportunities for you to harvest losses. Click here to learn more.

It is called BTST when you buy today and sell tomorrow without taking delivery of the stock. Since you are not taking delivery, should it be considered as speculative similar to intraday equity trading?

There are both schools of thought, one which considers it to be speculative because no delivery was taken. A factor to consider is if such BTST trades are done just a few times in the year show it as STCG, but if done frequently it is best to show it as speculative business income.

Paying advance tax is important when you have a business income. When you have a business income you have to pay most of your taxes before the year ends on March 31 st. It could be more or less. The best way to pay advance tax is by paying tax for that particular time period, so Sept 15 th pay for what was earned until then, and by March 15 th close to the year end, you can make all balance payments as you would have a fair idea on how you will close the year.

You can claim a tax refund if you end up paying more advance tax than what was required to pay for the financial year. Tax refunds are processed in quick time by IT department. You can make your advance tax payments online by clicking on Challan No. Also, here is an interesting link that helps you calculate your advance tax — http: You can also check this link to see how exactly interest or penalty is calculated for non-payment of advance tax.

Both these financial statements might need an audit based on your turnover and profitability. We will discuss more on this in the next chapter.

An audit is required if you have a business income and if your business turnover is more than Rs 1 crore for a financial year. For equity traders, an audit is also required as per section 44AD in cases where turnover is less than Rs. There are various types of audits prescribed under different laws like company law requires a company audit; cost accounting law requires a cost audit, etc. Ideally this audit should be done by the IT department itself, but considering the number of balance sheets out there it is surely impossible for IT department to audit each one of them.

You the tax payer can use any CA of your choice. We will in the next chapter briefly explain how a CA typically creates these two statements. It also helps lenders evaluate credibility, and act as a check for any fraudulent practices. Which ITR form to use? I have come across incidents where people have declared both speculative and non-speculative as capital gains to avoid having to declare business income, and not having to use ITR3.

Taking a shortcut like this could mean a lot of trouble if called for an IT scrutiny. Business expenses when trading — Advantage of showing trading as a business is that you can show all expenses incurred as a cost which can then be used to reduce your tax outgo, and if a net loss for the year after all these costs, it can be carried forward as explained above.

Disclaimer — Do consult a chartered accountant CA before filing your returns. Audit is also required as per section 44AD in cases where turnover is less than Rs. I have two questions — 1 Is an audit required in case I am incurring loss and my turnover is less than 1 cr? But if your net income for the year is above 2. There is no need of calculating turnover for advance tax. Based on whatever profit you have made till the end of sept, dec, and March periods, just pay incremental tax accordingly.

Audit is based on your turnover. Since there is a loss and you fall under a tax slab, yeah audit is needed. Check all the chapters, audit is quite a simple thing. If I have a loss of 20, then i need to get it audited for which i will have to pay CA another , So more loss if you make a loss in trading. What a shame, Audit should not be there if there is loss. Advance tax is not required if income is computed under section 44AD; see Section of Income tax Act.

The taxes you are paying is transaction tax. Income tax still has to be paid. You need to add this 1lk to 3. Sir, first of all great article. I have a personal question, please help me out.

I don't trade daily. In whole yr, I might have placed less than orders in total. I do not wish to get my account audited and also not claim any loss in ITR 4. When do I have to pay tax and I want to know about taxation charges as well as do I need to audit. I am just a stock trades. One more if earn above 1 crore in a single year what will be the taxation on that.

Trading is a business, so like every business you need to pay an advance tax every quarter on your expected year end income. IF you pay more, you can always get a refund. Tax is not on the turnover, it is on the net profits only. Turnover is to determine if you need a tax audit or not.

Hi, Whether tax audit required in foll0wing case: Total trading turnover — more than 1 crore in FY , but incurred loss in trading. Also, total income in same year is less than 2. Is tax audit required? Also — as a valued added service , can Zerodha provide services of tax consultants to prepare file returns of traders?

My Salary is — Rs. In your case since no advance tax has been paid till now, for April 1st to March 31st point 3 below is applicable C and from April 1st this year till you pay the taxes point 2 B is applicable.

For deferment of advance tax. The said interest is levied 0. Hey Krish, sorry if I suddenly sounded like a chartered accountant putting up this section of the act.. For advance tax not paid between April 1st to March 31st , 3. Vishal, the penalty can be paid, but that will be black mark on your ITR. I have gone through your article about taxation.

It has cleared many concepts. Can Zerodha provide any support for audit, CA? In such case, what advise would you give to beginners like me? I am salaried employee and I have been filling ITR1 form for last 2 years.