What keeps housewives, college students and corporate leaders glued to screens from 9.15 am to 3.30 pm on days the stock market is open? And what lessons are there in this for marketers?
Middle-class India is in the grip of a pandemic, and it’s called intraday trading, or day trading — buying and selling financial instruments such as stocks or commodities, within the same trading day, with the aim of profiting from short-term price movements. It’s a high-risk, high-reward activity that requires knowledge, discipline, and access to real-time market data.
I first got to know about it from my cousins on a ride back from a family memorial. One of the cousins had retired, done a course in stock market trading and was consistently trading since. He said the idea was to earn the same as his monthly salary once fetched him. I was impressed enough to open a Zerodha account the next day.
My cousin isn’t the only one. Students are dropping out of college, housewives are locking themselves in bedrooms, and corporates are taking leave to stare at screens half the day.
And most fail badly, losing their savings: statistically, 80 per cent of day traders quit within two years, and nearly 40 per cent quit within a month. The average individual investor underperforms the market by 1.5 per cent annually, while active day traders underperform by 6.5 per cent annually.
The government, meanwhile, is increasingly jittery at the prospect of this new class of micro retail traders plunging their lifetime savings into speculative, short-term instruments. SEBI, the capital market regulator, has brought in new rules governing futures and options (F&O) trading to curb the risks faced by retail traders. (Day trading, however, is different from F&O, which is relatively longer term.)
So, why this foolishness?
Here’s why. At $5.7 trillion, India’s market capitalisation is the fourth highest in the world. Benchmark indices Nifty 50 and Sensex are trading near all-time highs. Companies large and small are going public like never before. It’s a great time for storytelling, and narrative-building — of the 3 per cent who make it in day trading.
Also, compared to long-term investing, day trading can be started with smaller amounts of capital. And with advanced trading platforms like Zerodha, Upstox, and others, day traders have access to real-time data, charts, and tools to help make informed decisions.
Indian markets are also very volatile, influenced by both domestic and global news, and creates opportunities for day traders to exploit short-term price movements. Add to that mythical stories of college students and housewives who became crorepatis overnight.
So why not? You can start with as little as ₹1,000 at a trading website, after all.
Prepared plunge
But before you jump in, some strategy lessons from the marketer’s playbook, which frowns upon short-term plans and quick gains as these tend to be ephemeral. Unless backed by top-notch market research, emotional maturity, pilot testing, and platform knowledge, they can pivot quickly. Here’s a ready reckoner, so you don’t end up with an empty wallet:
Do a course. I would recommend an offline, not online course. Online simply doesn’t get the nuances of something new. Also, the power of networking — your peers, your teachers. It’s not cheap, though; do your homework and get something that suits your best aspirations within your budget.
Says Arvind Wable, a Chennai college student dabbling in retail trading, “When I first started, I relied heavily on free resources online, but the offline trading course I took really helped me understand market psychology and risk management better. The in-person interaction with experienced traders gave me insights that books and videos couldn’t. It wasn’t just about the technical stuff, but also how to control emotions during volatile sessions.”
Do market research. Take subscriptions to the best business papers, go after both hard news and soft news. Hard on cash? The newsletters then... they’re free. Watch YouTube videos and podcasts on everything, including podcasts of top management. Do ₹199 DIY courses on Zoom... lots around. Always be in learning mode.
Mukta Dhamankar, a homemaker from Mumbai who’s a successful trader, says it took at least a year or two to gather a full synopsis of the stock market.
Do Zerodha, Upstox, Groww, whatever. Look around, understand the technology behind the dashboard, and what data it gathers from where. Play around with small sums of money — it’s been recommended that a newbie shouldn’t even start day trading before a year, and should stick to mutual funds initially.
Do set limits. I’ve spoken to about a dozen successful day traders and all have told me it’s best to set ironclad limits for both profit and loss. This builds a disciplined investor mentality over a period of time, extremely valuable later.
As the late big bull Rakesh Jhunjhunwala once said, “Do not get carried away by market euphoria. Have an exit strategy and stick to it.”
All the best.
(Shubho Sengupta is a digital marketer with an analogue past)