Dummies Guide on How to START daytrading in India? FAQs

Guidelines on how to Start day trading in The Indian Share Market.

  1. To start day trading in India, you will need to first open a Share Trading and Demat Account with a Stock Broker in India.
  2. Your Account Opening application process is done online. After the initial online application is completed, you are required to print out the Power of Attorney Form, sign it and post it to the brokers registered office address. It will take about 3-5 days to complete the whole application process.
  3. To open the above Share Trading Account, you will need to own an Indian Govt. Issued Identity card, a PAN Card and a Bank Account in India (bank balance is not relevant).
  4. While filing the Online Application, you are required to attach copies of the above ID card, PAN Card, 6 months bank statements and a cancelled cheque .
  5. After completing the above steps, Your account will be opened and issued with the login credentials for your Trading Account. You will now need to transfer your funds from the Bank Account to your Trading Account using Net Banking, IMPS, NEFT or UPI. The online transferred funds  gets added to your new Trading Account in just few minutes. You can now start buying and selling shares without having to wait any more.
  6. NSE is the preferred Exchange for daytraders. The Equity Segment of the National Stock Exchange (NSE) in India opens at 9.15am and close at 3.30pm. This is the time between which you will daytrade in Stocks.
  7. There are four thousand plus companies listed in Stock Exchange. You will daytrade only on 200+ Stocks , which are considered to have sufficient liquidity and leverage for day trading. These 200+ stocks are called F&O Underlying Stocks.

Some pointers that might help along the way from a beginner daytrader to going professional.

  1. There is a misconception among the public that you will need a large sum of money to open a Share Trading Account and start daytrading. You can start Share Trading with any amount you like. 10k will be a reasonable amount to start with and get some practical hands on experience.
  2. With so many Stock Brokers around, There is also confusion as to which stock broker to choose. Opening an account with a broker like Zerodha will help you do long term investing in shares, invest in SIP’s etc, even if you decide not to continue daytrading later on. The goal is to make your initial journey smoother with less roadblocks. Once you get your hands on with daytrading and learn how these things work, you can open a second account with a broker like Finvasia, where you can daytrade without paying any brokerage charges. 
  3. When opening a new account, it is advisable to activate all exchanges and all segments on your new Account Application, NSE, BSE, MCX Exchanges and Equity, Futures, Currency and Commodity. Get all the segments activated, just in case if you need to use such facility in the future. It is easier getting it all activated in one go.
  4. After your Trading Account gets opened, depending on your bank balance in the statements you submitted, the broker will assign a Relationship Manager for you. The more money in your bank statement, the nicer this Relationship Manager will sound. So please, don’t transfer all your savings to your trading account initially to impress your new lady manager. In your initial years of daytrading, you are likely to daytrade and loose all that initial funds you transferred because of your own trading mistakes and ignorance.
  5. If you are “exceptionally” talented, I mean the “creme de la creme” in your family, It takes about 3-5 years before you start making any consistent income from full time daytrading. In the first few years of daytrading, playing golf in the noon, or sipping martinis by the beach is only a farcry dream for daytraders in India. If you are still young and an average Joe, give it a second thought before you consider daytrading as a full time profession. It is much easier to go out and find a job now, than wait 5 years to grow old and realize that daytrading is not for you. Statistics provided by many stock brokers shows that, the success rate among individual daytraders in India is only about 2 percentage. Unless you are financially sound, this is not a full time profession you want to bet your future on.
  6. Finally, to start daytrading you wont need much capital, but as your progress it this profession, the whole thing gets capital intensive.  If you are planning to take daytrading as a full time profession, to make a decent living out of this, you will need large amounts of trading funds. A daytrader starts by trading equity stocks but  matures in the derivative segment. The big money is made and lost in derivative segment trading and not by daytrading equity stocks. Most successfull Indian daytraders you have seen on social media, who does this as a full time profession are doing derivative trading and has in excess of 20+ lakhs INR / 30k USD in their trading accounts. Due to strict margin restrictions by the stock exchanges, metaphorically speaking, it gets easier to make 60 lakhs with a trading fund of 20 lakhs, than make 2 lakhs out with a small trading fund of 1 lakh in the derivative segment.

Do Not Ignore This Once You Start Day-Trading In India