Updated: Aug 5, 2021
If you are an intraday trader or just stepped into intraday trading, there are chances many of you would have till now experience losses. And to be truthful I'm one of them who has cut huge loss in intraday trading 'coz I was being very foolish with the market. And if you already had some experience in the market we all know making money in the market is not that easy as it seems.
We all know behavior plays a very important role in the market and I'm saying this with my personal experience. If you had no knowledge or even if you have them the one thing we don't want to welcome is losses. And when we incurred losses we become so desperate to cover those losses and at that moment we often make some desperate decisions that cost us very much and until we realize that it already is too late.
So, I'm here to share my experience with the situation because it's better to learn from others' mistakes than our own.
Now, coming to the question "is it right to sell your holdings to cover your intraday losses?"
I'm going to be very crisp about the answers to this question keeping in mind the importance of time.
In my experience, we should never try to cover the losses of intraday by selling our holdings, because in doing so we not only lose the opportunities of our holdings but also lose more money by paying taxes @15% u/s 111A under head capital gains.
If you don't know let me tell you that profit & gains from intraday trading are considered speculative business and gains from your short-term holdings are taxed under STCG @15%.
So, maybe you may consider this as covering your losses but income tax won't. You will be liable to pay taxes and in doing so you are not only paying 15% extra from your pocket but also losing opportunities for your holdings. Now you decide, whether is it wise to sell your holdings to cover losses of intraday?
What to do?
Well, in my opinion, the only thing you can do is plan your trade and strategy, this is the part you have to do yourself. And the second option is to file your taxes and carry forward those losses till the next 4 years because income tax has given us that opportunity.
I hope you find this article interesting and unique.
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see you until next time,
The Humane Opportunist