How Low Brokerage Can Save You in F&O If you are a trader in Nifty futures, who wants to double his capital by intraday trading within 1 year, then see the calculation below and see why a low brokerage is absolutely MUST to achieve this aim. Who - Traders in Nifty Futures Aim - Double a Capital of 1 lac in 1 year How - Trade in Nifty Futures on Intraday Basis With a Capital of Rs. 1 lac, you should be able to trade in 4 lots of Nifty Futures at current rates. To double your money, you actually need to earn 500 Nifty Points, if you are trading with Nifty Futures. To do that, you have approximately 220 trading days. Lets assume you trade on a Daily Basis and Intraday only. Hence, you need to earn 500/220 = approximately 2 points per trade. Easy? Now look at the calculations below: Total No. of trades = 250 (for ease of calcuation) No. of Points earned = 500 Total money earned on 4 lots = Rs. 1,00,000 Brokerage per lot = Rs.150-250 per lot Total Brokerage per day for 4 lots = Rs. 600 to Rs. 1000 Total brokerage for the entire year = Rs. 1,50,000 to Rs. 2,50,000 Net Profit - Brokerage = Rs. 50,000 to Rs. 1,50,0000 LOSS Now one can argue that by trading in Nifty Futures, 500 points can be achieved in half of that time. Lets assume that you can achieve this target in 6 months, instead of 1 year. This is a pretty aggressive assumption, because if this is true, you can potentially double your capital every 6 months. Still, lets go ahead with this calculation: Total No. of trades = 125 No. of Points earned = 500 Total money earned on 4 lots = Rs. 1,00,000 Brokerage per lot = Rs.150-250 per lot Total Brokerage per day for 4 lots = Rs. 600 to Rs. 1000 Total brokerage for the entire year = Rs. 75,000 to Rs. 1,50,000 Net Profit - Brokerage = Rs. 25,000 PROFIT OR Rs.50,0000 LOSS Hence, we see that with a brokerage of Rs. 150-250, which is the prevailing rates for most brokerages as of now in India, it is next to impossible to generate consistent returns from the market by Intraday Trading. So Switch to Low brokerage providers like us and turn your loosing trades into profitable ones..
Posted on: Fri, 29 Nov 2013 03:21:58 +0000
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