Day trading has become one of the most talked-about topics among new market participants. Everywhere you look—Telegram groups, Instagram pages, YouTube channels—someone is claiming to make easy daily profits. But beneath the excitement, there is a huge amount of confusion, half-knowledge and dangerous assumptions.
This article breaks down the biggest myths surrounding day trading and explains the essential tools traders use, including leverage, pledging, margin trade financing and trade-and-carry. If you're even thinking about entering the world of intraday trading, this guide will help you understand the reality before risking your money.
The Truth Behind “You Need Huge Capital to Day Trade”
One of the most common assumptions beginners make is that day trading requires massive capital. But that’s not true. In intraday trading, there are fundamentally two ways to participate—option buying and option selling.
Option buying requires very little capital. Many traders start with just ₹2,000 to ₹5,000. Option selling, on the other hand, does require a larger account, usually starting from ₹1,00,000 and above, because the risks are higher and the position sizes are bigger.
So no, day trading is not only for people with big pockets. You can start small, but starting small doesn’t mean starting blindly.
Is Intraday Trading a Guaranteed Loss Machine?
Another widespread myth is that intraday trading automatically leads to losses. The truth is losses happen when you trade without knowledge. If you don’t have risk management, if you don’t control position size, if you don’t hedge your trades and if you treat the market casually—you will lose money, whether you are a long-term investor or a day trader.
In intraday trading, you are predicting only a few outcomes. As an option buyer, you are predicting whether the price will move up or down. As an option seller, you are predicting whether the price will go up, go down or stay within a range. These are simple ideas, but trading them profitably requires discipline, not overconfidence.
A lack of risk management—especially greed—is the real reason people lose money, not the concept of intraday trading itself.
“Intraday Trading Is Only for Experts” — Another Misconception
Day trading is not reserved for experts. Anyone can learn it, explore it, understand it and practice it. Before committing real money, beginners can try virtual or paper trading to test their strategy and understand market behaviour. There are plenty of tools that let you simulate real trades without risking a rupee.
The key is to be honest with yourself. If you try it and feel you don’t understand it—or if it creates stress—it may not be for you. Not everyone needs to be a day trader. Your job is to experiment and observe your own comfort level.
“Higher Risk Means Higher Returns” — The Most Dangerous Myth
Most people believe that taking bigger risks in intraday trading will automatically lead to higher rewards. While risk and reward are connected, uncontrolled risk never leads to consistent profits.
The biggest enemies in day trading are greed and impatience. People who chase additional returns after already making a healthy profit often end up losing everything. The best traders in the world follow predetermined rules. They decide beforehand how much profit is enough for the day and how much loss they are willing to tolerate. They do not take 50 or 100 trades a day—they take one or two high-quality trades and stop.
Consistency comes from discipline, not risk-taking.
Essential Day Trading Tools Every Beginner Must Understand
Now that the myths are cleared, let’s explore some important tools used in day trading. These tools can amplify profits—but they can also amplify losses if used incorrectly.
Leverage: Borrowing Money to Increase Your Trade Size
Leverage allows you to trade bigger amounts than your available capital. For example, if you have ₹10,000 in your trading account, your broker may offer 3x, 5x or even 6x leverage. With ₹10,000, you could execute trades worth ₹30,000 to ₹60,000.
Leverage feels powerful because it magnifies profits. But it also magnifies losses. A mistake at high leverage can wipe out your capital. That’s why leverage must be used carefully, not emotionally.
Pledging: Using Your Shares as Collateral
Pledging means “giving your shares as security to the broker” in exchange for additional funds to trade.
There is a smart way and a very dangerous way to pledge.
The dangerous way is pledging your volatile stocks. You expose yourself to volatility in two directions: your pledged shares can fall, and your intraday positions can fall. This creates double risk.
The smart way is pledging safe instruments like government bonds, Bharat Bond ETFs or fixed-income securities. These hardly fluctuate, so your collateral stays stable. You then use the borrowed money for controlled trading.
Even with pledging, brokers don’t give 100% value. There is always a haircut—meaning if you pledge securities worth ₹10,000, you might receive ₹7,000 to ₹9,000 as usable margin.
Margin Trade Facility (MTF): Buy Now, Pay Later for Stocks
Margin Trade Facility (MTF) is another method for increasing your buying power. Under MTF, you can purchase shares by paying only a small part of the total cost upfront. The broker finances the remaining amount.
You then repay this amount later, along with a small interest component. For example, many brokers charge around 9–10% annual interest for MTF positions. This facility works like a “Buy Now, Pay Later” model for stocks. It gives traders the ability to take large delivery positions without paying full capital immediately.
However, responsibility increases because delayed payments and market volatility can hurt if not managed well.
Trade and Carry: Pay Partially Now, Pay the Rest Later
Trade and Carry is similar to MTF but allows even more flexibility. You can purchase stocks by paying just a partial margin and pay the remaining amount within seven days. This means your remaining capital can stay free temporarily, which you can use elsewhere—perhaps to earn interest or trade other opportunities.
Again, this works only when managed smartly. Misusing this facility or delaying payments can lead to forced selling and losses.
Final Thoughts
Day trading is not rocket science, but it’s not blind gambling either. Myths, half-knowledge and random tips ruin more traders than market volatility does. When used responsibly, tools like leverage, pledging, margin financing and trade-and-carry can improve your trading ability. When used recklessly, they can destroy your capital.
If you’re serious about exploring day trading, take it slow. Learn the basics, understand the tools, practice with paper trades and observe your own behaviour in different market conditions. The next episode will dive deeper into the psychology of day trading, which is equally—if not more—important than the technical skills.
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