5.10What are the risks of intraday trading?
1What is it?
Intraday combines leverage, speed and emotion, a dangerous mix for beginners.
2Why does it exist?
Small mistakes are magnified. Costs add up. Professionals with better tools and speed are on the other side of your trades.
3Risks
- Leverage: 5× leverage turns a 2% adverse move into a 10% loss of capital.
- Costs: brokerage, STT, GST on every round trip.
- Overtrading and revenge trading (Level 12).
- Slippage in fast markets.
- Competition from algorithms and institutions.
4Quick revision
- Leverage magnifies losses.
- Costs eat profits.
- Emotion leads to overtrading.
5Knowledge check
Q1. With 5× leverage, a 3% adverse move costs what % of your capital?Show answer
15%.
Q2. Name two intraday risks.Show answer
Leverage, costs, overtrading, slippage, competition.
Q3. Who are you competing against?Show answer
Professionals and algorithms with better tools.