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To Avoid Margin Trading is the secret of Intraday Trading Success. As a trader, you will observe that no of profitable trades in case of cash based intraday trading are more compared to the margin trading in Intraday. There are multiple reasons for the same. In this video, we will discuss if you Avoid Margin Trading then it can be secret of your intraday trading success.
1. Risk Management: If you use margin for day trading then you override or overrule, the basic concept of risk management. In my case, i do not put more than 10% capital on risk in a single trade be it swing trading, Intraday Trading, Positional or Scalping. If you are deploying 10% capital but availing margin of 10 times then you are putting your entire capital risk.
2. By doing margin trading, you are taking overexposure in the stock market. It is similar to spending more with a credit card and spending less with debit card i.e. by availing leverage, we are taking high risk exposure.
3. Intraday trading with cash will make you more disciplined trader as you will follow the rules.
4. Margin trading is more stressful compared to cash trading. The quantum of loss is under control and you are not risking higher percentage of your capital on risk.
5. The brokers charge an interest rate on margin provided to the traders. Therefore, it is an additional cost.
It is important to book small profits consistently to remain profitable in day trading.
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