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High Risk vs Low Risk Mutual Funds: Which One is Right for You?

Before investing in mutual funds, the biggest question is whether I should invest in high-risk funds or low-risk funds. High-risk funds offer high returns but come with volatility, and low-risk funds offer lower returns and provide stability in the portfolio during market fluctuations.

In today’s blog post, we will give you an overview of high-risk funds and low-risk funds, along with their key differences and also tell you which one is suitable for you.

What are High Risk Mutual Funds?

High-risk mutual funds are those funds that primarily invest in equity and other volatile assets. Their primary objective is to generate higher returns over time. However, they are volatile in nature. High-risk can show volatility in the short-run, but can generate higher returns in the long-run, hence they are suitable for investors who have a longer investment horizon. High-risk mutual funds generally invest in small-cap and mid-cap stocks.

Key Features of High Risk Mutual Fund

The key features of a high-risk mutual fund are as follows:

Higher Returns: The high-risk mutual fund can generate higher returns over the long term as these funds invest in equities.
Volatile: High-risk mutual funds are highly volatile in nature. Their prices can fluctuate very sharply during a market correction.
Long-Term Investment Horizon: High-risk mutual funds are suitable for the investor who has a long-term investment horizon.
Inflation-Beating Return: The high-risk mutual fund can beat inflation in the long-run as it tends to generate high returns.

What are Low Risk Mutual Funds?

Low-risk funds are those mutual funds whose primary role is to protect the capital of investors and provide steady returns. Unlike any other high-risk mutual fund, a low-risk fund primarily invests in instruments having fixed returns, such as government bonds, treasury bills, etc. The low-risk fund posts low returns and is suitable for conservative investors. These funds are often used by the investor as an investment option when they want to create a balance in their portfolio.

Key Features of a Low-Risk Mutual Fund

The key features of a low-risk mutual fund are as follows:

Capital Preservation: The key objective of a low-risk mutual fund is to preserve capital from any downside.
Low Returns: As the low-risk mutual fund focuses on low volatility they also provides consistent low returns.
Conservative Investor: The low-risk mutual funds are suitable for investors having a conservative risk profile and prefer safety over high returns.
Stability in Portfolio: During volatile market conditions, a low-risk mutual fund helps in balancing the overall investment portfolio.

High Risk vs. Low Risk Mutual Fund

The key difference between high-risk and low-risk mutual funds is as follows:

Particulars	High Risk Mutual Fund	Low Risk Mutual Fund
Objective	The primary objective of investing in a high-risk mutual fund is wealth creation.	The key objective of investment in a low-risk mutual fund is to preserve capital.
Underlying Asset	High-risk mutual funds generally invest in equities, including small-cap and mid-cap stocks.	A low-risk mutual fund invests in fixed-income securities.
Returns	High-risk mutual funds post higher returns.	A low-risk mutual fund offers low to moderate returns in the portfolio.
Volatility	High-risk mutual funds are highly volatile in nature.	These funds offer low volatility.
Suitability	These funds are suitable for aggressive investors.	Low-risk mutual funds are suitable for conservative investors.
Taxation	High-risk mutual funds follow the equity taxation rule.	The low-risk mutual funds are taxed based on the investor’s income tax slab.
Impact of Market Fluctuations	These funds are highly affected by the market fluctuations.	Low-risk mutual funds are the least affected by market fluctuations.
Safety of Capital	The safety of capital is not guaranteed in a high-risk mutual fund.	In a low-risk mutual fund, capital is generally safer than in a high-risk mutual fund.

Which is suitable for you – High Risk or Low Risk Fund?

Choosing among high-risk and low-risk funds depends on the investor’s financial goal, investment objective and risk profile. If an investor is looking to create wealth in the long run, they can opt for a high-risk mutual fund, as they have the potential to generate a high return. On the other hand, a low-risk mutual fund is suitable for a conservative investor whose priority is to preserve capital and earn steady returns. In most of the cases, it is advisable to have a mix of both high-risk and low-risk mutual funds.

Conclusion

On a concluding note, both high and low-risk mutual funds serve different purposes. High-risk mutual funds are suitable for investors seeking long-term wealth creation and who are comfortable with market volatility. While there is a category of investor who do not want to take risks, are not comfortable with volatility in their portfolio, and prefer low-risk investment options with stable and predictable returns. However, both funds carry certain risks, such as high-risk funds carry market risk and low-risk funds carry interest rate risk, credit risk, etc. Therefore, it is advisable to consult your investment advisor before making any investment in mutual funds. Pocketful offers access to 2,000+ mutual fund schemes. Download now and enjoy zero brokerage on delivery trades and mutual fund investments.

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5	FD (Fixed Deposit) vs Stocks: Which is the better investment option?
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8	SIP vs Lump Sum: Which is Better?
9	Mutual Funds vs Direct Investing: Differences, Pros, Cons, and Suitability
10	SIP in Stocks vs SIP in Mutual funds?

Frequently Asked Questions (FAQs)

What is the meaning of high-risk and low-risk mutual funds?
High-risk mutual funds are those funds that invest primarily in equities and have the potential to post higher returns. Whereas low-risk mutual funds invest in fixed-income securities, such as government bonds, etc. and post stable returns with lower volatility.
How to reduce risk while investing in a high-risk mutual fund?
One can reduce their risk by increasing their investment horizon. High-risk mutual funds are volatile in the short run; however, in the long run, they post inflation-beating returns.
Do high-risk mutual funds always post high returns?
No, a high-risk mutual fund does not always post high returns their performance depends on the fund manager’s capabilities and market performance. Returns are not guaranteed in a high-risk mutual fund.
What are the key examples of high-risk mutual funds?
The key examples of high-risk mutual funds are mid-cap funds, small-cap funds, sectoral and thematic funds, etc.
Do low-risk mutual funds always invest in debt securities?
No, it is not necessary that a low-risk fund always invest in debt securities. There are categories of hybrid funds, such as a conservative hybrid fund, which invests a small portion of its portfolio in equity-related instruments.

May 13, 2026

How to Find Stocks for Swing Trading?

Swing trading has become popular among traders who do not want to look at charts all day like intraday traders, but still want to capture short-term opportunities in the market. It lies somewhere between day trading and long-term investing, generally holding stocks for a few days to a few weeks to capture price swings.

But the important question is, how do you find the right stocks for swing trading? Honestly, not every stock is suitable for swing trading.

In this blog, we will break down step by step and in a simple way, how to find a stock for swing trading.

What is Swing Trading?

Swing trading is a style of trading that seeks to capture short-term market movements. Positions are usually held overnight and generally last from 2 to 10 holding days. This approach usually depends on technical analysis to find entry and exit points.

What Makes a Stock Good for Swing Trading?

1. It Should Be Easy to Buy and Sell (High Liquidity)

First thing, the stock should be actively traded. If a stock has good volume:

You can enter easily
You can exit without problems
Price does not move too much just because you placed an order

2. There Should Be a Clear Trend

This is very important. A good swing trading stock usually moves up consistently (uptrend) or moves down consistently (downtrend)

Avoid stocks that just move randomly up and down without direction. They can confuse you and lead to bad trades.

3. Volume Should Support the Move

Volume tells you if a move is strong or weak. If the price goes up with strong volume, it is a good sign, but if the price moves without volume, it is not very reliable. So always check if volume is supporting the price movement.

4. The Chart Should Look Clean

This sounds simple, but it matters a lot. If a chart looks messy, confusing, or random, try to skip it. You want stocks where trends are visible, patterns are clear, movements make sense, and clean charts are easier to trade.

5. Avoid Very Low-Quality Stocks

Cheap stocks (penny stocks) may look attractive, but they can be risky. They often have low liquidity, move randomly, and are easily manipulated. Hence, it is better to stick with quality stocks, even if they are slightly expensive.

Read Also: Best Indicators for Swing Trading

Step-by-Step Process to Find Swing Trading Stocks

Step 1: Check Market Sentiment

Stock movement is often driven by sentiment. You can watch the news, sector performance, global market trends, and check if any company is to announce its results. Positive news or strong sector momentum can act as a catalyst for price movement.

Step 2: Create a Watchlist

Do not try to trade everything. Instead, create a list of 10-20 quality stocks and start trading them, observe their behaviour daily, and wait for good opportunities. Sometimes, consistency matters more than quantity.

Step 3: Start with liquid stocks

Always begin with stocks that are actively traded, because you get better price execution, lower slippage, and easy entry and exit. For example, large-cap stocks with high daily volume can be a good buying option for a swing trade. This ensures smooth trading without getting stuck in positions.

Step 4: Look for Volatility

Swing trades do need movements, but those movements should be controlled. Look for moderate volatility wherein stocks move steadily within a trend.

Additionally, you can check volatility using ATR (average true range) and price movements over the past few days.

Step 5: Identify the trend

Trend is very important when it comes to swing trading. There are three types of trends:

Uptrend (higher highs, higher lows)
Downtrend (lower highs, lower lows)
Sideways (range-bound)

Swing traders usually buy in an uptrend during pullbacks and sell in a downtrend during rallies.

Step 6: Use Technical Indicators:

Swing trading relies heavily on technical analysis to find opportunities. Some of the most useful indicators include:

RSI (Relative Strength Index) – This indicator shows overbought and oversold conditions, and helps identify trend reversals.
Moving Averages – This indicator helps a trader identify trend direction based on the past price movements, and is a lagging indicator. The common types of MA are simple moving average (SMA), exponential moving average (EMA) and weighted moving average (WMA)
MACD – This indicator is moving average convergence divergence. It helps traders identify possible trend reversals and helps in the determination of entry and exit points.
Volume – This usually confirms the strength of a move. If a stock has crossed its resistance with a high volume, it will likely show a rally in the upcoming weeks.

Step 7: Focus on Support and Resistance Levels

Support and resistance are key levels where price tends to react. When the stock is near the support zone, the price tends to bounce up, and when it is near the resistance zone, the price tends to fall.

Swing traders often buy near support and sell near resistance. These levels also help in setting stop-loss and defining targets.

Furthermore, instead of manually searching hundreds of stocks, use a stock screener.

Screeners help you filter stocks based on price movements, volume, indicators, and market capitalisation. Stock screeners make the process faster and more systematic.

Read Also: MTF Swing Trading Strategy

Risk Management in Swing Trading

Trading in general is more about how you manage your risk once you enter a trade. Because no matter how good your analysis is, some trades will go wrong.The goal is simple: protect your capital first, profits will follow.

Let us see how we can manage risk while swing trading.

Always Use a Stop Loss: This is the most basic rule. Before entering any trade, decide the level at which you will exit if the trade goes wrong. This is known as your stop-loss. For example, if you buy at 100, you set a stop loss at 95. If the stock even falls now, your loss is limited.
Do not Risk too much on one Trade: Never put a big portion of your capital at risk in a single trade. Follow one simple rule of risking only 1-2% of your total capital per trade. So even if a few trades go wrong, your overall portfolio stays safe.
Keep Risk-Reward in Mind: Before taking a trade, ask yourself, “Is it worth it”? For example, if you are risking ₹100, try to aim for at least ₹200. This way, even if some trades fail, you can still stay profitable over time.
Avoid Overtrading: Taking too many trades usually leads to mistakes. You do not have to trade every day. Wait for good setups and opportunities. Sometimes, doing nothing is also a good decision.
Adjust your position size: Not every trade is equal. If you feel that this trade looks risky, use less capital. If it looks strong, you can go slightly bigger. This helps you manage risk better without overexposing yourself.

Read Also: Best Swing Trading Patterns

Conclusion

At its core, swing trading is about finding the right stocks, waiting for the right setup, and managing your risk properly.

You do not need to catch every move in the market. Even a few good trades, when taken with discipline and logic, can make a difference over time. The important aspect is to stay patient and not rush into trades just because the market is moving.

You need to understand that there will be losses, and that is part of the process. But if you keep those losses small and stick to a plan, you will grow consistently.

You can execute unlimited swing trades on Pocketful with zero brokerage on delivery. It offers advanced charts, instant buy/sell options, and same-day deposit and withdrawal for a seamless trading experience.

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5	5 Must-Read Best Swing Trading Books for Trader

Frequently Asked Questions (FAQs)

What is the best stock for swing trading?
There is no single best stock. Look for liquid stocks with good volatility and clear trends.
How many stocks should I track?
Curating a list of 10-20stocks is enough. You can track them.
Is swing trading risky?
Yes, but risk can be managed with proper stop-loss and position sizing.
How long should I hold a swing trade?
It is suggested to hold for a few days to a few weeks.
Do I need to analyse fundamentals before swing trading?
Yes, because basic understanding helps avoid risky stocks.

May 12, 2026

How Gains From Intraday Trading are Taxed

Intraday trading can feel simple on the surface. You buy and sell on the same day, book a profit or loss, and move on. But when you are thinking of these from a tax side, these are not the stock gains or capital gains.

In India, gains from intraday trading are taxed as speculative business income. In simpler words, your intraday trading income is part of your total income. This allows it to be taxed under your income tax slab, not under the gains.

This guide explains how intraday trading tax works in India for FY 2025-26, how losses are adjusted, which expenses can be claimed, and which ITR form you need to file.

What Is Intraday Trading Income

Intraday trading income refers to the profit or loss earned from buying and selling stocks. This includes all the trades that are completed within the same trading day. The position is squared off before the market closes. This means by the end of the day, there will be no delivery of shares to your demat account.

Buying and selling the same stock on the same day.
No actual ownership or transfer of shares.
Profit or loss is based on price movement.
Treated as trading activity, not investment.

Intraday Gains As Speculative Business Income

Intraday trading differs from investing because there is no delivery of shares. Under the Income Tax Act, such transactions are treated as speculative. This puts intraday income under the business income category, not capital gains.

Treated as speculative business income.
Covered under Section 43(5) as no delivery-based trade.
Reported under Profits and Gains from Business or Profession.
Applies even if trading is occasional, not full-time.

This classification mainly impacts taxation rules, loss adjustment, and reporting requirements.

Tax Rate On Intraday Trading Income

Intraday trading income is taxed as part of your overall income. Since it falls under speculative business income, no separate or fixed tax rate applies to it.

Taxed as per the applicable income tax slab.
No special rate like capital gains.
Same treatment under both tax regimes.
Tax liability depends on total income.

This means the final tax on intraday income varies from person to person based on their overall earnings.

How Intraday Trading Losses Are Treated

Intraday trading losses are treated as speculative business losses. The rules for adjusting these losses are stricter than those for other types of losses, so understanding this section is important.

Can be set off only against speculative business income.
Cannot be adjusted against salary, capital gains, or F&O income.
Unused losses can be carried forward for up to 4 years.
Carry forward is allowed only if the ITR is filed on time.

This means if you incur a loss in intraday trading, you cannot reduce your overall tax immediately unless you have speculative profits in the same year or future years.

Deductible Expenses For Intraday Traders

Intraday trading allows you to claim expenses. But it is important that these should be directly related to your trading activity. These deductions help reduce your taxable income. This in turn lower your overall tax liability. Some of the common expenses are as follows:

Brokerage charges are paid on trades.
Securities Transaction Tax and exchange charges.
GST paid on brokerage and services.
Internet and data expenses used for trading.
Trading platform or research subscriptions.
Advisory or portfolio management fees.
Depreciation on a laptop or trading setup.

Tax Rate Under Old And New Tax Regime

Intraday trading income is taxed based on slab rates, not a fixed percentage. Since it is treated as speculative business income, it gets added to your total income. The tax you pay depends on which tax regime you choose and your overall earnings.

New Tax Regime (Default)

This regime is designed to keep things simple. It offers lower tax rates across slabs but removes most deductions. Your total income, including intraday profits, is taxed directly based on these slabs.

Income Slab	Tax Rate
Up to ₹4,00,000	Nil
₹4,00,001 – ₹8,00,000	5%
₹8,00,001 – ₹12,00,000	10%
₹12,00,001 – ₹16,00,000	15%
₹16,00,001 – ₹20,00,000	20%
₹20,00,001 – ₹24,00,000	25%
Above ₹24,00,000	30%

This regime focuses on simplicity and lower base tax rates.

Lower slab rates reduce overall tax burden for many taxpayers.
Minimal documentation since most deductions are removed.
Easy to calculate and plan taxes.

Old Tax Regime (Optional)

This regime follows the traditional structure. Tax rates are higher in comparison. But you can reduce your taxable income through deductions and exemptions.

Income Slab	Tax Rate
Up to ₹2,50,000	Nil
₹2,50,001 – ₹5,00,000	5%
₹5,00,001 – ₹10,00,000	20%
Above ₹10,00,000	30%

This regime is built around deductions and exemptions.

Allows deductions like 80C, 80D, HRA, and home loan benefits.
Helps reduce taxable income when investments are well planned.
Suitable for individuals with structured financial planning.

The choice depends on how much you can reduce your taxable income through deductions versus benefiting from lower slab rates.

Quick Difference

Basis	New Tax Regime	Old Tax Regime
Tax Rates	Lower slab rates	Higher slab rates
Deductions	Very limited deductions	Multiple deductions allowed (80C, 80D, HRA)
Standard Deduction	Available (₹75,000 for salaried)	Available (₹50,000 for salaried)
Complexity	Simple and easy to calculate	Requires planning and documentation
Best Suited For	Individuals with fewer deductions	Individuals with high tax-saving investments
Flexibility	Less flexibility in reducing taxable income	More flexibility through exemptions and deductions
Default Option	Yes	No

Read Also: Income Tax on F&O Trading in India

ITR Filing Audit and Advance Tax Rules

Intraday trading income have deep compliance requirements. This includes selecting the correct ITR form and checking the applicability of the audit. Also, you must consider paying advance tax if required.

ITR Filing

Intraday traders need to file ITR-3.
Income is reported under business or profession.
Using ITR-1 or ITR-2 is not suitable in this case.

Tax Audit

Audit may apply based on turnover and profit declared.
Turnover is calculated using the absolute profit method.
Audit is required if limits under tax rules are crossed.

Advance Tax

Applicable if total tax liability exceeds ₹10,000.
Paid in quarterly instalments during the year.
Delay can lead to interest charges.

Proper compliance helps avoid penalties and ensures that losses can be carried forward without issues.

How To Report Intraday Trading Income

When you are planning to report the intraday income, there are some simple steps that you would need to follow. These are:

Calculate total intraday profit or loss from broker statements.
Compute turnover using the absolute profit method.
Deduct eligible trading-related expenses.
Report income under Profits and Gains from Business or Profession.
File ITR-3 within the due date.

Accurate reporting ensures that your income is correctly classified and any losses are carried forward without issues.

Common Mistakes To Avoid In Intraday Taxation

Many traders focus only on profits and ignore how those profits are reported. This often leads to errors during tax filing, which can result in penalties later. Some of the things to avoid are:

Reporting intraday income as capital gains instead of business income.
Filing the wrong ITR form like ITR-1 or ITR-2.
Ignoring intraday losses and not reporting them.
Incorrect turnover calculation.
Missing the ITR filing deadline.
Not keeping proper records of trades and expenses.

Conclusion

Intraday trading income is taxed as speculative business income and not as capital gains. This is the key rule you should remember when calculating taxes. This will ensure you add the amount to the total income and avoid miscalculation that can lead to penalties.

Understanding these basics helps you stay compliant and avoid errors during filing. With Pocketful, you can track your trades, access detailed reports, and manage your tax calculations more efficiently while trading.

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3	How to Choose Stocks for Intraday the Right Way?
4	Top 10 Intraday Trading Strategies & Tips for Beginners
5	How to Use Pivot Points in Intraday Trading?
6	What is Intraday Trading?
7	What Is Day Trading and How to Start With It?
8	Silver Intraday Trading Strategy
9	Top 10 Day Trading Courses in India
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Frequently Asked Questions (FAQs)

Is Intraday Trading Income Taxed As Capital Gains?
No, intraday trading income is not treated as capital gains. It is classified as speculative business income and taxed as per your applicable income tax slab.
Which ITR Form Should Be Used For Intraday Trading?
Intraday traders need to file ITR-3 since the income is reported under business or profession.
Can Intraday Trading Loss Be Adjusted Against Salary?
No, intraday trading loss cannot be set off against salary or other income. It can only be adjusted against speculative business income.
Are Trading Expenses Allowed As Deductions?
Yes, expenses like brokerage, internet charges, and trading tools can be claimed if they are directly related to trading activity.
Is Advance Tax Required For Intraday Traders?
Yes, if your total tax liability exceeds ₹10,000 in a year, you need to pay advance tax in instalments.

May 11, 2026

Everything an F&O Trader Should Know About Return Filing

To perform better trades and evaluate profits well, every trader needs to know F&O taxation in India 2026. This directly impacts how you report income and pay taxes. By knowing this, you can avoid delay in filing and the subsequent charges.

This is mainly because the F&O trading is considered a business activity under income tax rules. So, these would not fall under the capital gains, and so understanding the right treatment is important. So, if you are a trader looking for an answer, read this guide.

What Is F&O Taxation In India

F&O taxation in India works differently from regular investing. If you trade in futures and options, it is considered business income. This directly affects how you calculate profits, report income, and file returns.

Futures and options trading fall under non-speculative business income as per income tax rules. This classification allows certain benefits but also brings compliance requirements.

Some of the key aspects that you must know here are:

Classified as non-speculative business income.
Profits are taxed as per your income tax slab.
Losses can be set off against other business income.
Losses can be carried forward for up to 8 years.
No fixed or special tax rate applies.
Turnover is calculated using absolute profit and loss.
Advance tax is required if the liability exceeds ₹10,000.

How To Calculate Turnover In F&O Trading

Turnover calculation is a key part of F&O taxation in India 2026 as it determines audit applicability and correct return filing. In F&O, turnover is not the total trade value but is based on profits and losses from trades.

Formula:
Turnover = Absolute Profit + Absolute Loss + Premium Received (for options)

You need to add all profits and losses without adjusting them. For options trading, the premium received is also included.

For example, if you have a profit of ₹50,000, a loss of ₹30,000, and receive ₹10,000 as premium, your turnover comes to ₹90,000.

Which ITR Form To Use For F&O Trading

Selecting the correct ITR form is a critical step in F&O taxation in India 2026. Since F&O income is treated as business income, the form you choose must reflect proper reporting of profits, turnover, and expenses.

1. ITR 3 Is The Standard Choice

ITR-3 is used by most F&O traders. It is designed for individuals and HUFs earning income from business or profession, including derivatives trading. This allows full reporting of profit, loss, and expenses.

2. ITR 4 Under Presumptive Taxation

ITR-4 applies only if you opt for presumptive taxation under Section 44AD. Here, income is declared at a fixed percentage of turnover. Many F&O traders avoid this because it limits the flexibility to report actual profits or losses.

3. ITR 1 And ITR 2 Are Not Applicable

These forms are for salary, interest, or capital gains income. Since F&O is classified as business income, these forms cannot be used.

Tax Audit Applicability For F&O Traders

Tax audit rules are an important part of F&O taxation in India 2026. Your audit requirement depends on turnover, profit declaration, and the taxation method you choose. Understanding this helps you stay compliant and avoid penalties.

Criteria	Details
Turnover Above ₹10 Crore	Audit mandatory if 95% transactions are digital
Turnover Above ₹1 Crore	Audit applicable if digital condition is not met
Presumptive Taxation	Audit required if profit is less than 6% and income exceeds ₹3 lakh
Loss Reporting	Proper records needed to carry forward losses
Low Profit Margin	May attract scrutiny, strong documentation recommended

A tax audit validates your income, supports loss carry forward, and reduces the risk of notices.

Should F&O Traders Maintain Books Of Accounts

Maintaining books of accounts is an important part of F&O taxation in India 2026. Since trading is treated as a business activity, proper records help in accurate reporting and smooth return filing.

1. When It Becomes Mandatory

Books of accounts are required when your income crosses ₹2.5 lakh or when turnover exceeds ₹25 lakh. It is also important if you plan to carry forward losses.

2. What You Should Maintain

Your broker statements, profit and loss summary, bank statements, and expense proofs are usually sufficient. These documents help validate your income and claims if required.

F&O Loss Set Off And Carry Forward Rules

Understanding how losses work is important in F&O taxation in India 2026. It helps you reduce tax liability and plan your returns better.

Particulars	Details
Nature of Loss	Non-speculative business loss
Set-Off Allowed	Can be adjusted against all income except salary
Carry Forward Period	Up to 8 years
Condition	ITR must be filed before the due date
Set-Off in Future	Can be adjusted only against business income

This ensures that your trading losses are not wasted and can be used efficiently over time.

Advance Tax For F&O Traders

Advance tax is applicable in F&O taxation in India 2026 when your tax liability crosses a certain limit. Paying this on time helps avoid penalties.

Criteria	Details
Applicability	If total tax liability exceeds ₹10,000
Payment Requirement	Paid in installments during the year
Due Dates	June, September, December, March
Consequence of Delay	Interest under Sections 234B and 234C

Read Also: How to Show F&O Loss in ITR

Can F&O Traders Claim Expenses

F&O taxation in India 2026 allows traders to reduce their taxable income by claiming business-related expenses. Since trading is treated as a business activity, any cost directly linked to it can be deducted from your profits.

What Expenses Can Be Claimed: Expenses like brokerage charges, transaction fees, internet bills, and advisory or research subscriptions can be included. If you use a laptop or trading setup, a portion of its cost can also be considered.
Partial Expense Allocation: Some expenses, like phone or internet bills, may be used for both personal and trading purposes. In such cases, only the portion related to trading should be claimed.
Important Rule To Follow: Expenses must be directly related to trading activity and supported by proper records. Payments made in cash beyond prescribed limits may not be allowed.

Example Of F&O Tax Calculation For A Salaried Trader

Mr. X earns a salary of ₹12 lakh. He trades in F&O. His trade details are:

Trade income = ₹5.2 lakh
Expenses = ₹95,000
Net F&O profit = ₹4.25 lakh.

This is treated as business income.

His total income, including ₹60,000 interest, becomes ₹16.85 lakh. Under the old regime, he claims ₹2.25 lakh as deductions, reducing taxable income to ₹14.6 lakh.

His total tax liability comes to ₹2,60,520 after cess. Since he has F&O income, he must file ITR-3 and maintain proper records.

Should F&O Traders Choose Old Or New Tax Regime

Choosing the right tax regime is an important part of F&O taxation in India 2026. Since trading income is treated as business income, this decision directly affects your final tax liability.

1. New Tax Regime

The new tax regime offers lower tax slab rates and a simpler structure. However, it does not allow most deductions such as 80C or 80D. This makes it suitable for traders who do not rely much on deductions.

2. Old Tax Regime

The old tax regime allows you to claim deductions and exemptions. This includes investment-based deductions and certain expenses, which can reduce your taxable income if used properly.

3. Important Consideration

For business income, switching between regimes is restricted. This means you should compare both options carefully before making a choice.

Conclusion

F&O taxation in India 2026 involves everything from turnover calculation to selecting the right ITR form, audit, filing, and profit reporting. Since F&O income is treated as business income, proper planning and record-keeping help you stay compliant and avoid unnecessary issues.

And if you are looking to trade with better insights and details, use Pocketful. It can help you manage everything smoothly and make return filing more efficient.

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4	Best Option Selling Strategy in India
5	Silver Taxation in India
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7	What is Lot size in F&O ? NSE Lot size list

Frequently Asked Questions (FAQs)

Is F&O income considered business income in India?
Yes, F&O income is treated as non-speculative business income and is taxed as per your income tax slab.
Which ITR form should be used for F&O trading?
ITR-3 is generally used for reporting F&O income. ITR-4 can be used only if you opt for presumptive taxation.
Can F&O losses be carried forward?
Yes, F&O losses can be carried forward for up to 8 years if the return is filed within the due date.
Is tax audit mandatory for all F&O traders?
No, tax audit depends on turnover and profit conditions. It becomes applicable only when specific limits are crossed.
Do F&O traders need to pay advance tax?
Yes, advance tax is required if your total tax liability exceeds ₹10,000 in a financial year.

May 11, 2026

Best Exit Strategies for Day Traders

Have you ever bought a stock and watched it go up, only to see it crash before the market closed? We all have been there at some point. Day trading can be very exciting and rewarding. However, it requires a lot of strict discipline and a strong plan.

Many beginners spend all their time finding the right stock to buy. They think a good entry is all they need to make money. But entering a trade is only half the battle. Your real success depends on your intraday entry and exit strategies.

Knowing when to exit in intraday trading is what helps you keep your profits safe. It also helps you limit your losses when things go wrong in the market. If you do not have a proper plan, fear and greed can easily take over your mind.

In this blog, we will talk about how you can plan your trades better. Let us dive into the world of smart trading and learn how to protect our hard-earned money.

Meaning of Exit Strategies for Day Traders

An exit strategy is a clear plan you make before you even start a trade. It tells you exactly when you will close your open position. In the stock market, closing a trade on the same day is often called squaring off.

When you do day trading, you have to square off all your open trades before the market closes. If you forget to do this, your stock broker might do it for you. A good exit plan should always have three main parts to keep you safe.

The first part is your target price. This is the exact price level where you will sell your stock to book a happy profit.

The second part is your stop-loss price. This is the danger level where you will sell your stock to stop any further loss.

The third part is a daily time limit. For example, you might decide to close all your trades by 3:10 PM every day. You do this no matter if you are in profit or loss. This saves you from sudden wild market moves at the very end of the day. Platforms like Pocketful make it very easy to set these targets and stop-losses right when you place your buy order.

Good Exit Strategies for Day Traders

Now that we know why a clear plan is so important, let us look at three very effective exit strategies. You can easily use these methods every single day to protect your trading capital and lock in your profits safely.

1. The Fixed Target and Stop-Loss Strategy

This is the most common and simple strategy for anyone starting in the share market. In this method, you decide two exact price points before you even buy the stock. The first point is your target price. This is where you will sell the stock to take your profit home. The second point is your stop-loss price. This is your emergency exit. If the stock drops to this level, you sell it immediately to stop any bigger losses

Let us understand this with a quick example. Suppose you buy a share of a company at 1000 Rupees. You decide your target price is 1050 Rupees and your stop-loss is 980 Rupees. Here you are risking 20 Rupees to make a profit of 50 Rupees. Once you place the order, you do not need to panic. If it hits 1050, you make money. If it hits 980, you take a small loss and move on.

2. The Trailing Stop-Loss Strategy

Imagine you buy a stock, and it starts going up very fast. You want to capture more profit, but you are scared it might suddenly fall and wipe out your current gains. This is exactly where a trailing stop-loss becomes your best friend in the market.

A trailing stop-loss is a smart digital tool that moves up right along with your stock price. Let us say you buy a stock at 1000 Rupees and set a trailing stop-loss at 950 Rupees. If the stock has a great run and goes up to 1100 Rupees, trail your stop-loss at 1050 Rupees.

Now, you are in a completely safe zone. Even if the stock suddenly crashes,You still walk away with a happy 5 Rupee profit.

3. Exiting at Support and Resistance Levels

If you like reading price charts, this strategy is perfect for you. This method uses the natural bouncing points of the stock market. You can look at a chart to find the support and resistance zones. Support acts like a strong floor where a falling stock stops and bounces back up. Resistance acts like a hard ceiling where a rising stock struggles to cross and falls back down.

If you buy a stock and it is rising nicely, you can plan your exit right near the upcoming resistance level. Since the stock will likely hit this ceiling and fall, it is the perfect spot to book your profits.

How to determine Entry, Target and Stop-Loss for Exit strategies for day trader

Finding the exact points to enter and exit might sound like rocket science. But we can easily do it using some simple market tools. First, you need to find the main market trend.

You must ask yourself if the stock is going up, going down, or just moving sideways. You should always try to place your trades in the direction of the main trend. Trading against the trend is very risky for beginners.

To find a safe entry price, you can look for support and resistance levels on your chart. Support is a bottom price level where a falling stock stops and bounces back up. Resistance is a top price level where a rising stock stops and falls back down.

If a stock is in an upward trend, you can buy it near a strong support level. This gives you a safe entry point with less risk. Now, let us look at some technical tools, how you can use these tools to find your targets and stop-losses.

Technical Tool	How it helps you in Day Trading	How to use it for Exits
Moving Averages	It smooths out messy price changes to show you a clear line of the trend.	You can quickly exit your buy trade if the stock price falls below this moving average line.
RSI (Relative Strength Index)	It is a number that tells you if a stock is overbought or oversold by traders.	If RSI goes above 70, the stock is overbought. You can use this signal as a target to book your profits.
VWAP	It shows the real average price of a stock based on both volume and price.	If the current price goes very far above the VWAP, it might fall soon. This is a good place to plan your exit.

Once you find your perfect entry, you absolutely must set a stop-loss. You should place your stop-loss just slightly below the support level for your buy trades. This way, if the support level breaks, you are out of the trade with a very small loss.

You need good software to see all these price levels clearly. Pocketful offers great and fast charting software to help you spot these entry and exit levels quickly.

Advantage of Exit strategies for day trader

Having a strict exit plan has many wonderful benefits for you. It helps you become a calm, disciplined, and relaxed trader. Let us look at the main advantages of having these strategies.

Protects Your Money: A stop-loss ensures that one single bad trade does not wipe out your whole account. It cuts your losses automatically without any delay.
Secures Your Profits Stock markets can go up and down very fast. A preset target helps you book your profits in cash before the market trend reverses.
Reduces Your Stress : When you know your exit points before trading, you do not panic. It removes negative emotions like fear and greed from your decisions.
No Overnight Tensions Since you exit everything on the same day, you sleep peacefully. You do not have to worry about bad global news coming after market hours.

By deciding your exit point early, you also save yourself from sitting in front of the screen all day with a fast-beating heart. You simply let the system do the hard work for you.

Disadvantage of Exit strategies for day trader

While exit strategies are great, they do have a few downsides too. You need to be aware of these facts so you can manage your daily expectations well. Let us look at the disadvantages in a simple way.

Limited Daily Profits Since you must exit on the same day, you might miss out on bigger profits if the stock keeps going up the very next morning.
Needs Constant Attention Even with a plan, you have to watch the live market closely. This can take a lot of your time and mental energy every day.
Higher Trading Costs Day trading means you buy and sell very often. This frequent trading leads to higher brokerage fees and government taxes.
Early False Exits Sometimes, the price drops just enough to hit your stop-loss, and then goes back up. You exit with a loss, which feels very frustrating.

Even with these negative points, the safety provided by an exit strategy is far better than trading blindly based on luck. It is always better to have limited profits than to face unlimited losses.

Conclusion

Day trading can be a wonderful way to grow your money if you do it with strict rules. The stock market can be a very wild place, but your solid plan will keep you grounded. Always remember that saving your capital is much more important than making huge profits on a single day.

We truly hope this guide helps you make much better choices in the stock market. You can use modern platforms like Pocketful to get advanced tools that make your daily trading journey smooth and easy. Keep learning new things, stick to your written plan, and enjoy the beautiful process of becoming a better trader every single day.

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Frequently Asked Questions (FAQs)

What is the exact meaning of an exit strategy in day trading?
What is the exact meaning of an exit strategy in day trading? An exit strategy is a clear, written plan you make before entering any trade. It tells you the exact price to sell for a profit and the exact price to sell for a loss.
What are key advantages of using a stop-loss?
The biggest benefit is that it limits your financial loss if the stock price moves against your wish.
How to use technical tools for my daily exit plan?
You can easily use simple tools like Moving Averages or RSI on your live stock charts.
How do I easily decide my daily profit target?
You should always look at the risk and reward balance. If your stop-loss risks 100 Rupees, your profit target should be at least 150 Rupees or more.
What happens if I forget to exit my intraday trade?
If you do not exit your trade by yourself, your stock broker will do it for you just before the market closes.

May 10, 2026

What is Cover Order?

Stock market trading is simply buying and selling of shares of different companies. Many people in India are now trying intraday trading. This means they buy and sell shares on the same day before the market closes. This can make quick profits but can also be risky at times.

Managing risk is one of the most important parts of intraday trading. It means you decide how much money you are willing to lose before you even start. Without a plan, one bad trade can take away all your savings. This is why tools like cover orders are so popular in India. Let us start by looking at what is cover order and how it keeps your money safe.

What is a Cover Order?

If you are new to the market, the cover order meaning is very easy to understand. This acts like two-in-one deal. When you buy a stock, you usually place one order. But with this special type, you place two orders at the very same time.

The first part is your main order. This is where you buy or sell the stock. The second part is a stop-loss order. This second part is like a security guard. It stands there to watch your trade. If the price goes the wrong way and hits a certain limit, this guard will automatically close your trade.

Using a cover order in the share market means you are “covering” your risk from the start. You don’t have to wait and watch the screen every second. The system already knows when to pull you out of a bad trade. Many beginners ask what is a cover order when they see the option on their trading app. It is simply a way to trade with a safety net. This makes cover trading a great choice for people who want to be disciplined and avoid big losses.

Key Features of Cover Orders

Every trading tool has its own set of rules. Here are the main things you should know about these orders.

Mandatory Stop-Loss Order: In a normal trade, you can choose to set a stop-loss or not. But in this case, it is compulsory. You cannot place the order without telling the system where to stop the loss. This forces you to be a disciplined trader.
Intraday-Only Order Type: These orders are only for people who want to finish their trades on the same day. In India, the market closes at 3:30 PM. If you do not close your trade by 3:15 PM, your broker will usually do it for you automatically. You cannot hold these shares for the next day.
Higher Leverage with Lower Margin: Brokers give you “leverage,” which is like a temporary loan to buy more shares. Because you have a mandatory stop-loss, the broker feels safer. They know you won’t lose too much money. So, they let you trade with more money than you actually have in your account.

Types of Cover Orders

There are basically two ways you can use this tool depending on your view of the market.

Long Cover Order: You use this when you think the market will go up. You buy first and set a stop-loss below your buying price. It is for the “bulls” who are feeling positive.
Short Cover Order: You use this when you think the market will go down. You sell first and set a stop-loss above your selling price. It is for the “bears” who think prices will fall.

Two Legs of a Cover Orders

Every such order has two “legs” or parts.

The Main Leg: This is your entry into the market. It can be a buy or a sell.
The Stop-Loss Leg: This is your exit plan. It always works in the opposite direction of your first move to protect you.

Read Also: What is Covered Call?

Benefits of Cover Orders

Risk Management: You know exactly how much you might lose. This stops you from making emotional mistakes when the market gets scary.
Automation: You don’t have to keep staring at the charts. The system handles the exit for you.
Higher Leverage: You can trade a larger quantity of shares with less money. This can lead to better profits if your timing is right.
Peace of Mind: You can go about your day. If you are a working professional, you don’t have to worry about a sudden market crash wiping you out.
Faster Execution: Both the entry and the safety exit are sent to the exchange at once. This saves precious seconds.

Risks & Limitations of Cover Orders

Mandatory Stop-Loss: Sometimes the price might hit your stop-loss and then immediately go back up. Because the stop-loss is mandatory, you might get “kicked out” of a trade too early.
Intraday Only: You cannot change your mind and keep the shares for a few days. You must exit before the day ends, even if you are in a small loss.
No Trailing Stop-Loss: Most basic cover orders don’t move automatically with the price. If the price goes up, you have to manually move your stop-loss higher to lock in profits.
Slippage Risk: In a very fast market, the price might jump over your stop-loss. This means you might lose a little more than you planned because the system couldn’t find a buyer at your exact price.
Over-Leverage Risk: Because the broker gives you extra money, you might be tempted to take very big trades. If many trades go wrong, it can still hurt your account.

Cover Order vs Bracket Order

Number of Orders: A cover order has two parts (Entry + Stop-loss). A bracket order has three parts (Entry + Stop-loss + Target Profit).

In a cover order, you only set the bottom limit for loss. You have to manually sell to book your profit. In a bracket order, you set both the bottom limit and the top profit target.

Use a cover order if you want to let your profits run as high as possible. Use a bracket order if you want to be completely “hands-off” and let the system book your profit too.

Example of a Cover Order

Example for Buy (Long Position)

Let’s say you want to buy shares of Reliance at Rs.2,500 and you think that the price will go upto Rs.2,550. But risk also needs to be managed and you decide to exit if the price falls to Rs.2,480.

You place a buy cover order and your main order is at Rs.2,500. Your stop-loss is at Rs.2,480. If the price goes up to Rs.2,550, you can sell and make a profit of Rs.50 per share. But if the price starts to drop at Rs.2,480, the system will automatically sell it for you. Here you will only lose Rs.20 per share and the losses are capped.

Example for Sell (Short Position)

Short selling means you sell the shares first believing that the price will fall. Imagine HDFC Bank is at Rs.1,600 and you believe that the prices will go down, you sell it at Rs.1,600.

A stop-loss at Rs.1,615 is set, but if the price goes up instead of down, you will lose money. But once it hits Rs.1,615, the system will buy the shares back for you. You stop your loss at Rs.15 per share.

This tool helps you see the balance. You decide the risk (the stop-loss) and you hope for the reward (the profit). It makes your trading very clear and logical.

Conclusion

Trading in the share market is a journey. Like any journey, safety should come first. The cover order is a simple and powerful tool that gives you that safety. It helps you manage your risk, gives you extra trading power, and keeps your emotions in check. Whether you think the market is going up or down, this tool helps you trade with a clear plan.

For more market news and insights, download Pocketful – offering users zero brokerage on delivery trades and an easy to use platform designed for both beginners and experienced investors.

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Frequently Asked Questions (FAQs)

Can I use a cover order for long-term delivery?
No. These are strictly for intraday trading. You must close your position on the same day. If you want to hold shares for months or years, you should use a regular delivery order.
Can stop-loss be cancelled in cover orders?
If you have filled the main order, stop loss becomes mandatory. The prices of the stop-loss can be changed but it cannot be removed entirely.
What happens if I forget to close my trade?
Most Indian brokers will automatically close your open cover orders a few minutes before the market shuts. However, they might charge a small fee for this service.
Can I use this for Options trading?
Most popular brokers in India do not allow cover orders for Options. This is because Options are very volatile and the risk is too high for the broker to offer extra leverage.
Why is my stop-loss not executing at the exact price?
This happens during “slippage.” If the market moves too fast, there might not be anyone to buy your shares at your exact price. The system will then sell at the next best price available.

May 10, 2026

What is Annualised Returns in Mutual Funds?

When you start investing in mutual funds, one of the first things you come across is “returns.” And very quickly, another term follows, annualised returns.

At first glance, it sounds technical. But once you understand it, it becomes one of the most useful ways to compare your investments.

In this blog, let us break it down in a simple way so you can actually use it while making investment decisions.

Understanding Mutual Fund & Returns

A mutual fund is basically a pool of money collected from many investors, which is then invested in different asset classes like stocks, bonds, gold, etc. This money is managed by a professional fund manager.

These investments then give you returns, which further earn returns, so that your money grows over time.

Before jumping into annualised returns, let us quickly understand what “returns” mean.

Returns are simply the profit or loss you earn from your investment. For example, you invest ₹1 lakh, and after 2 years, it becomes ₹1.44 lakh

Your total return is ₹44,000 or 44%.

Now here is the catch: this 44% does not tell you how fast your money grew each year. That is where annualised returns come in.

What are Annualised Returns

Annualised returns tell you the average yearly return your investment has generated over a period of time.

Instead of looking at total growth, it converts the return into a per-year growth rate, assuming the investment grew at a steady pace.

Let us understand the concept with a simple example;

Investment: ₹1,00,000
Value after 2 years: ₹1,44,000
Total Return: 44%

Now, the annualised return will tell you the average yearly growth rate. In this case, it is approximately 20% per year, not 22% (which many people assume by dividing 44% by 2).

Annualised returns consider compounding, which means the investment amount earns returns in the first year, and also earns returns in the second year

So, your money grows on both your original investment and your past gains. That is why simply dividing the total return by the years gives an incorrect picture.

Importance of Annualised Returns

1. Helps Compare Different Investments

Let us say fund A gave 50% return in 5 years, and fund B gave 30% return in 3 years. How will you decide which one is better?

At first glance, Fund A looks better. But when you annualise:

Fund A gives 8.4% per year
Fund B gives 9.1% per year

Now the picture changes, since annualised returns allow you to compare investments fairly, even if the time periods are different.

2. Shows the True Picture

Total returns can sometimes be misleading. For example,60% return over 10 years sounds good, but when annualised, it is only about 4.8% per year, which is barely beating inflation. Annualised returns help you understand the real earning power of your investment.

3. Useful for Long-term Planning

If you are investing for goals like:

Retirement
Buying a house
Children’s education

You need to know how your money grows year by year, not just overall. Annualised returns help you estimate whether you are on track or do you need to work on your investments.

Annualised Returns vs. Absolute Returns

This is where many investors get confused.

Absolute returns show total gains or losses, and are considered best for short-term investments (less than 1 year). For example, you invest ₹1 lakh, and it becomes ₹1.1 lakh in 6 months. This is 10% absolute return.

Formula for Annualised Returns

AR = (Final Value / Initial Investment)^1/n – 1

Where,

Final value = Value of your investment at the end

Initial Investment = Amount you invested

n = number of years

Example

Let us understand this with an example:

Suppose you invested ₹100,000, and after 3 years it became ₹172,800

If we apply the above formula:

₹172,800 / ₹100,000 = 1.728

We know that n = 3

Now, Annualised Return will be (1.728)^⅓ – 1, which is equal to 20%

Therefore, your investment grew at an average rate of 20% per year, not 72.8%.

Where to Check Annulised Returns

1. Use Investment Apps or Platforms

If you are using apps to invest in Mutual Funds, you will find annualised returns in the app itself. Platforms like Pocketful, Groww, Zerodha Coin, etc. make it very easy.

You just need to

Open an account with the Pocketful app
Search for the mutual fund
Open the fund details, and look for returns. You will see numbers like: 1-year return, 3-year return, 5-year return

2. Check the Fund House Website

You can also go directly to the mutual fund company’s website.

For example:

HDFC Mutual Fund
ICICI Prudential Mutual Fund
SBI Mutual Fund

On the fund page, look for a section called “Performance”.

3. Use Financial Websites for Comparison

If you want to compare multiple funds, websites are very helpful. You can check: Value Research, Morningstar, Moneycontrol

Using these websites, you can compare funds side by side and see long-term annualised returns.

Things to Keep in Mind

1. Always Compare Similar Funds

Make sure you are comparing the same type of funds. For example:

Large-cap vs large-cap
Mid-cap vs mid-cap
Debt vs debt

Comparing a debt fund with an equity fund does not make sense because the risk levels are completely different.

2. Do not look at Just One Number

Annualised return is important, but it should not be the only thing you check. Also, look at consistency over time, riskometer, and expense ratio. A fund giving a steady 11% is often better than one jumping between 20% and -10%.

3. Try to interpret what you are seeing

Keep this simple rule in mind: 1-year return is absolute, and 3-year, 5-year, and 10-year returns are annualised. So do not compare the 1-year return of one fund with the 5-year return of another. This won’t give you the right picture.

Conclusion

At the end of the day, annualised returns help you cut through the noise. Instead of getting impressed by big total returns, you get to see how efficiently your money has actually grown over time.

It brings a sense of clarity. You can compare funds better, set more practical expectations, and avoid getting carried away by short-term performance.

But always remember to look at consistency, risk, and whether the investment fits your goals. Use it to stay informed, but combine it with logic and long-term thinking. For more market insights and learning, download Pocketful – offering zero brokerage on delivery, mutual funds, and IPOs through an easy-to-use platform.

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Frequently Asked Questions (FAQs)

Is annualised return the same as CAGR?
Yes, both mean the same thing in most cases.
When should I use annualised returns?
Use annualised returns when your investment period is more than one year.
Can annualised returns be negative?
Yes, if your investment loses money over time.
Do mutual fund apps show annualised returns?
Yes, most apps and websites show it clearly.
Is a higher annualised return always better?
Not always. You should also look at risk and consistency.

May 9, 2026

What is Trail Commission in Mutual Funds?

When you buy a regular mutual fund, you do not pay a direct fee to the person selling it to you. Instead, the mutual fund company pays them a fee behind the scenes. This specific fee is known as a trail commission in mutual fund investing.

We see many people looking for reliable ways to grow their wealth today. To do this properly, it is very important to understand the costs involved in your investments. Many new distributors look at structures like the nj wealth mutual fund distributor commission to understand how they can build a long-term business. This structure shows how earnings can grow steadily over the years.

So, you might ask, what is trail commission in mutual fund exactly?. It is not a one-time payment. It is a continuous payment that acts as a reward for the ongoing service the agent provides to you. In this blog, we will explain everything about trail commission.

Meaning of trail commission in mutual fund

To truly grasp this concept, we need to look at how mutual fund distributors are paid. A trail commission is an ongoing payment made by the Asset Management Company (AMC) to the distributor. This payment continues every year until you decide to sell your investment. It is basically a small percentage of your total invested capital.

You might be wondering if this money is deducted directly from your bank account. The answer is no. This commission is built into the mutual fund’s Total Expense Ratio (TER). The TER covers all the costs of running the fund, and a small part of it is set aside to pay the distributor.

Years ago, agents received a big upfront commission as soon as you invested. However, the rules changed to protect investors. SEBI banned upfront commissions, and now the industry runs almost entirely on the trail model.

Below is a simple comparison to help you understand the difference between the two types of commissions.

Feature	Trail Commission	Upfront Commission (Now Banned)
Meaning	A continuous payment is made as long as the investment is held.	A one-time lump sum paid at the very beginning.
Payment Timing	Calculated daily and paid monthly or quarterly.	Paid instantly when the investment is made.
Cost Location	Embedded inside the fund’s Total Expense Ratio.	Not included in the ongoing fund expenses.
Regulatory Status	Actively encouraged and allowed by SEBI.	Banned by SEBI to prevent mis-selling.

Who Receives Trailing Commissions?

Let us clear up a very common doubt. Who actually gets this money, and who is paying it. The person who receives the trailing commission is your mutual fund distributor or agent. They earn this reward for helping you set up your account and guiding you over the years.

But here is the interesting part. You do not pay them directly from your bank account. The Asset Management Company, or AMC, pays this fee. The AMC takes a tiny portion from the fund’s Total Expense Ratio to pay the agent. So, the fee is handled behind the scenes.

How to Calculate Trail Commission?

You might be curious to know how this fee is figured out. It is very transparent. The mutual fund industry uses a standard trail commission formula. The calculation happens every single day because the value of your mutual fund changes daily. Here is the simple formula: (Total Units Held x Current Daily NAV x Annual Commission Rate) divided by 365.

Let us look at a quick example. if,

Amount invested: Rs 1,00,000

Agent Commision: 0.75%

Period: 365 Days

Annual Commision = Rs 750

The company adds up these daily amounts and pays the distributor at the end of the month or quarter. It is a small daily amount that grows organically as your wealth grows.

Use of trail commission in mutual fund

You might wonder why mutual fund companies use this specific payment system. Asset Management Companies use trail commissions primarily to acquire and retain retail investors. Mutual fund companies know how to manage money, but they need local distributors to reach investors in different cities. By paying a recurring fee, the company gives the distributor a strong reason to keep the client invested for the long term.

The commission rates vary widely depending on the type of fund you choose.Below is a table showing the current average commission ranges based on the fund category.

Mutual Fund Category	Typical Annual Trail Commission Range	Reason for the Rate
Equity Funds	0.80% to 1.50%	Higher risk requires more client guidance and behavioral coaching.
Hybrid Funds	0.60% to 1.10%	Moderate risk profile combining both equity and debt assets.
Debt & Liquid Funds	0.05% to 0.50%	Low risk and highly stable, requiring minimal advisory effort.
Index / Passive Funds	0.15% to 0.30%	Funds simply track the market index, requiring very little management.

Advantage of trail commission in mutual fund

The trail commission model brings several wonderful benefits to both investors and distributors. By focusing on long-term relationships instead of quick sales, this system creates a healthier financial environment. Let us explore the main advantages.

For the distributor,

Passive Income Generation: Distributors do not have to hunt for new sales every single day to survive.
The Power of Compounding: As the stock market naturally goes up over time, the total value of the clients’ money goes up. This means the distributor’s income increases automatically without any extra work.
Low Setup Costs: Starting this business requires almost zero inventory and very little office space. You just need good knowledge and a phone.
Unlimited Growth: If an agent adds just two new clients every month with a Rs 10,000 SIP, they can eventually build a massive income of over Rs 30 lakhs annually.

For the investor,

Behavioral Coaching: Your distributor acts as a coach, advising you to stay calm and stay invested during market falls.
Alignment of Interests: Because the agent’s income is based on your total fund value, their income drops if you lose money. They are highly motivated to pick good funds so your wealth grows.
Frictionless Payments: You never have to write a cheque to pay your advisor. The fee is handled automatically within the fund’s daily pricing.
Continuous Portfolio Reviews: Your advisor is paid to regularly check your investments and suggest changes if a fund stops performing well.

Read Also: Best Mid-Cap Mutual Funds in India

Disadvantage trail commission in mutual fund

While the system has many good points, it also has some serious drawbacks. It is important to look at the disadvantages for both investors and distributors to understand the complete picture.

For the distributor,

Market Volatility Risk: Since the commission is based on the total value of the funds, a sudden stock market crash will instantly reduce the distributor’s monthly income.
Regulatory Changes: Rules made by SEBI and AMFI change frequently. New rules often reduce the commission percentages, directly hurting the agent’s earnings.
Client Loss to Direct Platforms: Today, many investors prefer to manage their own money. Distributors face a tough challenge keeping clients from moving to modern direct investing apps.
Slow Initial Growth: It takes many years of hard work to build a large client base, and the income in the first few years is usually very low.

For the investor

loss of compounding: Because the commission is deducted daily, it slowly eats into your profits. Over a short period of one or two years, a 1% fee might look tiny. However, over a 20 or 25 year period, this tiny fee becomes a huge amount of lost money.
Loss of Returns: You earn less money compared to direct mutual funds because of the higher expense ratio.
Conflict of Interest: Some agents might suggest an equity fund over an index fund just because the equity fund pays them a higher commission.
Paying for No Service: Sometimes, an agent helps you open an account and then never calls you again. You still end up paying them a fee every year for zero help.

Fortunately, there is a very simple solution to avoid these disadvantages. You can choose to invest in “Direct Mutual Funds” instead of “Regular Mutual Funds.” Direct funds do not pay any trail commissions, which means their expense ratio is much lower. All the saved money stays in your account and grows for your future.

Conclusion

Understanding the costs behind your investments is the first step toward financial freedom. Trail commissions play a very important role in the Indian mutual fund industry. They give distributors a reason to guide you, support you, and keep you invested through the ups and downs of the market. For many people who need a financial coach, paying this small recurring fee is entirely worth it.

Whether you choose to work with a dedicated distributor or take the DIY route through a direct app, the most important thing is that you start investing. Stay patient, invest simply, and let compounding work for you – invest in mutual funds with Pocketful.

S.NO.	Check Out These Interesting Posts You Might Enjoy!
1	Best Thematic Mutual Funds in India
2	Types of Mutual Funds in India
3	Best Long-Term Mutual Funds to Invest in India
4	Best SIP Mutual Funds in India
5	Debt Mutual Funds: Meaning, Types and Features
6	How to Check Mutual Fund Status with Folio Number?
7	Best Money Market Mutual Funds in India
8	Mutual Fund Fees & Charges in India
9	History of Mutual Funds in India
10	Best Performing Mutual Funds of the Last 10 Years

Frequently Asked Questions (FAQs)

What is the meaning of trail commission in mutual funds?
It is a recurring, ongoing fee paid by a mutual fund company to a distributor. It is paid as long as you keep your money invested in that specific regular mutual fund.
What are the benefits of paying a trail commission?
The main benefit is that you get continuous support from a financial advisor. They help you with paperwork and review your portfolio.
How to use the trail commission calculation formula?
The formula is very simple. You take the total units you hold, multiply it by the current daily NAV, multiply that by the annual commission percentage, and divide by 365.
Who actually pays this commission to the distributor?
The Asset Management Company (AMC) pays the distributor. However, the money ultimately comes from your investment.
How can you avoid paying trail commissions?
You can easily avoid this fee by investing in “Direct Mutual Funds” instead of “Regular Mutual Funds.”

May 9, 2026

Silver Intraday Trading Strategy

Silver has become a popular choice for intraday traders, mainly because it moves well during the day. And in trading, movement is what creates opportunity.

But intraday trading is not just about taking quick trades. It’s about understanding how the market behaves, when it is most active, and how to approach it with a clear plan.

In this blog, we will go through everything you need to know, like the best time to trade, what affects silver prices, simple strategies, and a few useful indicators.

Why you should Trade Silver Intraday?

Silver is one of those assets that moves a lot during the day. And for intraday traders, that movement is exactly what creates opportunities. But beyond just “price movement,” there are a few solid reasons why silver works well for intraday trading.

Prices Move Fast: Silver prices do not stay still. Even small global updates, like changes in the US dollar or interest rates, can push prices up or down quickly. For a trader, this means you do not have to wait for days. Good moves can come within hours.
You do not Need Very High Capital: With smaller contracts like Silver Mini and Silver Micro, you don’t need a huge amount of money to start. You can begin small and increase your position as you gain confidence.
Technical Levels Work Well: Silver respects basic technical concepts like support and resistance, breakouts, and trendlines, so even simple strategies can work if you follow them with discipline.
Global Events Create Good Opportunities: Big news events, like US inflation data or central bank decisions, often lead to strong moves in silver. These are the times when intraday traders usually find the best setups.

Factors Affecting Silver Prices

Movement of the US Dollar: Globally, silver is traded in US dollars. So, when the dollar gets stronger, silver prices usually fall. And when the dollar weakens, silver often goes up. It is a simple but very important relationship, and it affects the price of the metal.
Interest Rates and Inflation: Investors often consider silver as a way to protect against inflation. When inflation rises, silver can move up, and when interest rates go up, silver can slow down. This happens because higher interest rates make other investments more attractive.
Industrial Demand: The white metal is also used in industries such as electronics, automotive, energy, etc. So when demand from these sectors increases, silver prices can move higher.
Demand and Supply: Eventually, it still comes down to demand and supply. If more people want to buy silver and the supply is limited, prices go up. If demand is weak or supply is high, prices can fall.
Rupee vs Dollar: If you are trading in India, the rupee also matters. Silver can become more expensive because of a weak rupee, and on the contrary, a strong rupee will cause silver prices to come down. So even if global prices stay the same, local prices can still change.

Read Also: Silver Trading on MCX

Best Time for Silver Intraday Trading

Silver is traded on MCX (Multi-Commodity Exchange).

The market opens at 9:00 AM & closes at 11:30 PM most of the year. However, these hours are extended to 11:55 PM during daylight saving time in the US.

Daylight Saving Time is a system where clocks are adjusted to make better use of daylight during the year. Clocks are moved forward by 1 hour in summer, and clocks are moved back by 1 hour in winter.

If you want to trade silver, you need to focus on the right time.

1. Morning (9:00 AM to 12:00 PM): This is when the MCX opens.

The market is usually slow
Price moves are limited
Not many strong trends

This time is better for watching the market and marking key levels rather than taking big trades

2. Afternoon (12:00 PM to 5:00 PM): You can take trades here, but opportunities are usually limited.

3. Evening (5:00 PM to 11:30 PM): This is the most important time for silver trading.

Global markets like London and the US are active
Volume increases
Price moves become faster and clearer

This is when most traders prefer to trade because the market gives better opportunities.

Silver Intraday Trading Strategies

1. Breakout Strategy

This is one of the easiest strategies to understand. First, mark a range or what we call as resistance and support in technical language, like the high and low of the morning. If the price breaks out of that range, it will most likely continue in the same direction.

Buy when the price breaks above the high
Sell when it breaks below the low
Keep a stop-loss just inside the range

2. Moving Average Strategy

MA strategy helps you stay with the trend. You can use something simple like 9 EMA and 21 EMA.

If the shorter average, i.e., 9 EMA, moves above the longer one, i.e., 12 EMA, it suggests an uptrend
If it moves below, it suggests a downtrend.

3. VWAP Strategy

VWAP is a very common intraday indicator. It stands for Volume-weighted average price.

If the price is above VWAP, the market is generally strong
If the price is below VWAP, the market is weak

Many traders usually buy near VWAP in an uptrend and sell near VWAP in a downtrend

4. News-Based Trading

Silver reacts quickly to global news, especially from the US. During events like inflation data or interest rate decisions, prices can move fast. But you have to be careful because movement is fast and trends can change very quickly.

Indicators That Work Best for Silver

1. RSI

RSI stands for Relative Strength Index and helps you understand if the market has moved too much in one direction.

If the RSI is above 70, it suggests the price of the commodity is in an overbought zone and is likely to correct from current levels.
Alternatively, if the RSI is below 30, it suggests that the price may be oversold, and there can be a possible rally from the current levels.

It is mainly used to avoid entering at extreme levels or to find possible reversals

2. MACD

MACD stands for Moving Average Convergence and Divergence, which helps you understand both trend and momentum.

When the MACD line crosses above the signal line, it suggests strength, and
When it crosses below, it suggests weakness

It works well when the market is moving in a clear direction.

3. Bollinger Bands

Bollinger Bands show how much the market is moving. There are usually 3 types of bands: the upper band, the middle band, and the lower band.

When prices move closer to the upper band, the asset may be overbought, and when prices move closer to the lower band, the silver may be oversold.

Price often reacts near the upper and lower bands, so they can act like temporary resistance and support.

4. Volume

Volume tells you how strong a move really is. High volume indicates a move is strong, and low volume means the move may not last longer.

For example, if a breakout happens with good volume, it has a better chance of continuing the ongoing uptrend.

Conclusion

Intraday trading in silver can offer opportunities, but it’s not all about trading. It’s about knowing the market, keeping the trading process simple and being smart with risk. If you trade at the right time and you are disciplined, silver can be a good choice for intraday trading. Invest in Silver Funds & trade Silver Options with advanced tools, enjoy zero brokerage on delivery and zero lifetime AMC with Pocketful.

Frequently Asked Questions (FAQs)

Is silver good for intraday trading?
Yes, silver moves well during the day, which makes it suitable for intraday trading.
What is the best time to trade silver?
The evening session, after 5 PM, when the global markets are also active, is usually the best time to trade.
How much money do I need to start?
You can start with smaller contracts, so you don’t need a very large amount.
Does news impact silver prices?
Yes, especially global news like US data. It can cause quick price movements.
What is a common mistake that most traders make?
Overtrading and not using a stop-loss are very common mistakes.

Gold Rate in Top Cities of India	Silver Rate in Top Cities of India
Gold rate in Ahmedabad	Silver rate in Ahmedabad
Gold rate in Ayodhya	Silver rate in Ayodhya
Gold rate in Bangalore	Silver rate in Bangalore
Gold rate in Bhubaneswar	Silver rate in Bhubaneswar
Gold rate in Chandigarh	Silver rate in Chandigarh
Gold rate in Chennai	Silver rate in Chennai
Gold rate in Coimbatore	Silver rate in Coimbatore
Gold rate in Delhi	Silver rate in Delhi
Gold rate in Hyderabad	Silver rate in Hyderabad
Gold rate in Jaipur	Silver rate in Jaipur

May 8, 2026

Supply and Demand Trading Strategy

When you look at a stock chart, it might feel like prices move randomly. But in reality, there is always a reason behind every rise and fall, and that reason is supply and demand.

At its core, the market is nothing but a battle between buyers and sellers. When buyers are stronger, prices go up. When sellers dominate, prices fall.

Supply and demand trading is about understanding this battle and using it to make better trading decisions.

What is Supply & Demand Trading?

Supply and demand trading is a price-action-based strategy where traders identify key areas on a chart where buying or selling pressure is strong.

Instead of relying heavily on indicators, this method focuses on how the price behaves.

Demand indicates that buyers are strong, and the prices will move up, whereas supply indicates that sellers are strong and prices will move down.

Importance of Demand and Supply in Trading

1. It Helps You Understand the Current trends

A lot of traders just look at charts and try to guess what will happen next. But if you focus on demand and supply, you stop guessing, and you start asking better questions like, “Are buyers stronger right now? Or are sellers in control?

2. It Makes Entry Points Easier

One of the hardest parts of trading is knowing when to enter. This is where demand and supply really help.

You start noticing certain areas where price reacted strongly before, because places where price shot up were a strong demand zone and conversely, places where price dropped, strong supply zone.

3. It Teaches You Patience

This is something most traders struggle with. People enter trades because they are getting bored or they have FOMO.

But when you follow demand and supply, you naturally become more patient. You wait for the price to come to your level. You do not chase it, which alone can improve your trading a lot.

4. It Improves Your Timing

Timing can make or break a trade. If you enter too early, you end up losing money. Enter too late, you miss the move

Demand and supply help you enter closer to where the move starts, which means less risk with better reward, and less stress.

What are Demand & Supply Zones

When you look at a stock chart, you will notice that the price does not just move randomly. It often reacts in certain areas again and again. Those areas are called demand and supply zones.

In simple words, these are spots on the chart where a lot of buying or selling happened earlier, which caused a strong move in price.

A demand zone is an area where buyers take control and push the price up quickly.

In this zone, you will usually see that the price moves slowly or sideways, and then suddenly shoots up. It matters because when the price comes back to that same area, buyers often step in again

A supply zone is the opposite. It is an area where sellers have become strong and pushed the price down fast.

In this zone, you will notice that the price moves up or sideways, then suddenly drops. That starting point of the fall becomes a supply zone.

When prices return there again, sellers may become active.

Example

Let us say a stock is around ₹300. It stays there for some time. Then suddenly jumps to ₹340.

That ₹300 area becomes a demand zone. Now, if the price comes back to ₹300 again, buyers will be active, and they might step in again from that level.

Supply & Demand vs. Support & Resistance

S. No	Basis	Supply & Demand	Support & Resistance
1	Basic Idea	Focuses on areas where strong buying or selling has happened	Focuses on price levels where the price has reacted before
2	Form	Zones (a range or area)	Lines (specific price levels)
3	Concept	Based on the imbalance between buyers and sellers	Based on past price reactions
4	Formation	Created by strong, sudden moves in price	Formed by repeated rejection at a level
5	Approach	More price-action based	Often used with technical analysis tools
6	Risk Management	Easier to place stop-loss beyond the zone	Stop-loss placed slightly above/below the line
7	Reliability	Often considered more dynamic and realistic	Can sometimes give false signals if too rigid

Supply & Demand Trading Strategy

1. Buying Strategy

Identify a strong demand zone
Wait for the price to return
Look for confirmation (like bullish candles)
Enter a buy trade
Place stop-loss below the zone.

2. Selling Strategy

Identify a strong supply zone
Wait for the price to revisit
Look for bearish confirmation
Enter a sell trade
Place a stop-loss above the zone

Risk Management in Supply & Demand Trading

1. Always Use a Stop-Loss

This is non-negotiable. When you take a trade based on a demand or supply zone, you should know where to place a stop loss. If you are buying at a demand zone, stop-loss below the zone, selling at a supply zone, stop-loss above the zone.

2. Risk Only a Small Amount Per Trade

Do not put a big chunk of your capital into one trade.

A simple rule many traders follow is to risk only 1-2% of their capital per trade. This way, even if a few trades go wrong, your overall capital stays safe.

3. Do not Trade Every Zone

Not every demand or supply zone is worth trading. Some zones are weak, some are already tested multiple times.

You can focus on fresh zones (not tested too many times), strong moves away from the zone, and zones that are aligned with the trend because quality matters more than quantity.

4. Wait for Confirmation

Do not blindly enter just because the price reached a zone. Wait for some sign of why buyers or sellers are stepping in. Look for

Strong rejection candle
Engulfing pattern
Momentum shift

This extra patience can save you from many bad trades.

Advantages of Supply and Demand Trading

Easy to Understand: Demand and supply trading does not involve the use of complex technical indicators. It mainly focuses on price action, which makes it a go-to strategy for traders.
Works in all markets: You can trade using the demand and supply zones in all types of markets, like equity, forex, and crypto, because the concept remains the same.
Helps you Trade with Market Logic: Instead of guessing, you are trading based on price behaviour and trying to follow the zones where buying and selling have already happened.

Read Also: What is Demand-Pull Inflation?

Disadvantages of Supply and Demand Trading

Zones can be subjective: Two traders might draw different zones on the same chart. There is no single perfect way to mark them. It completely depends on the traders’ perspective.
Not always accurate: Sometimes, price breaks a zone instead of reacting to it. No strategy works 100% of the time.
Can be misused by beginners: Beginners often do not have much of an idea about trading. They mark too many zones, enter without confirmation, and ignore trend direction.

Conclusion

When you start looking at charts in combination with demand and supply zones, things become a lot clearer. You are no longer just reacting to price movements. You begin to understand why those moves are happening and where they are likely to happen again.

Demand and supply zones help you focus on the areas that actually matter. They teach you to wait patiently, take better entries, and manage your risk more effectively.

But like any trading approach, this also takes practice. What matters is staying consistent, learning from your trades, and improving step by step.

In the long run, trading is less about being right every time and more about being disciplined. Stay patient, keep your trading simple, and let consistency grow your capital over time – start trading with Pocketful.

S.NO.	Check Out These Interesting Posts You Might Enjoy!
1	What is Commodity Market in India?
2	What is Intraday Trading?
3	What is Options Trading?
4	What is Future Trading and How Does It Work?
5	Different Types of Trading in the Stock Market
6	What Is Leverage in the Stock Market?
7	Natural Gas Trading Guide: Price Factors, Risks & Strategy
8	What Is Day Trading and How to Start With It?
9	What is AI Trading?
10	Arbitrage Trading in India – How Does it Work and Strategies

Frequently Asked Questions (FAQs)

What is supply and demand trading in simple terms?
It is a trading method where you buy at demand zones and sell at supply zones.
Is supply and demand trading better than indicators?
It depends, but many traders prefer it because it focuses on real price action.
Can beginners use this strategy?
Yes, but it requires practice and patience.
Does it work in intraday trading?
Yes, it works in intraday, swing, and positional trading.
What timeframe is best?
Higher timeframes (like daily) are more reliable.

May 8, 2026

Blog

What are High Risk Mutual Funds?

Key Features of High Risk Mutual Fund

What are Low Risk Mutual Funds?

Key Features of a Low-Risk Mutual Fund

High Risk vs. Low Risk Mutual Fund

Which is suitable for you – High Risk or Low Risk Fund?

Conclusion

Frequently Asked Questions (FAQs)

What is the meaning of high-risk and low-risk mutual funds?

How to reduce risk while investing in a high-risk mutual fund?

Do high-risk mutual funds always post high returns?

What are the key examples of high-risk mutual funds?

Do low-risk mutual funds always invest in debt securities?

What is Swing Trading?

What Makes a Stock Good for Swing Trading?

1. It Should Be Easy to Buy and Sell (High Liquidity)

2. There Should Be a Clear Trend

3. Volume Should Support the Move

4. The Chart Should Look Clean

5. Avoid Very Low-Quality Stocks

Step-by-Step Process to Find Swing Trading Stocks

Step 1: Check Market Sentiment

Step 2: Create a Watchlist

Step 3: Start with liquid stocks

Step 4: Look for Volatility

Step 5: Identify the trend

Step 6: Use Technical Indicators:

Step 7: Focus on Support and Resistance Levels

Risk Management in Swing Trading

Conclusion

Frequently Asked Questions (FAQs)

What is the best stock for swing trading?

How many stocks should I track?

Is swing trading risky?

How long should I hold a swing trade?

Do I need to analyse fundamentals before swing trading?

What Is Intraday Trading Income

Intraday Gains As Speculative Business Income

Tax Rate On Intraday Trading Income

How Intraday Trading Losses Are Treated

Deductible Expenses For Intraday Traders

Tax Rate Under Old And New Tax Regime

New Tax Regime (Default)

Old Tax Regime (Optional)

Quick Difference

ITR Filing Audit and Advance Tax Rules

ITR Filing

Tax Audit

Advance Tax

How To Report Intraday Trading Income

Common Mistakes To Avoid In Intraday Taxation

Conclusion

Frequently Asked Questions (FAQs)

Is Intraday Trading Income Taxed As Capital Gains?

Which ITR Form Should Be Used For Intraday Trading?

Can Intraday Trading Loss Be Adjusted Against Salary?

Are Trading Expenses Allowed As Deductions?

Is Advance Tax Required For Intraday Traders?

What Is F&O Taxation In India

How To Calculate Turnover In F&O Trading

Which ITR Form To Use For F&O Trading

1. ITR 3 Is The Standard Choice

2. ITR 4 Under Presumptive Taxation

3. ITR 1 And ITR 2 Are Not Applicable

Tax Audit Applicability For F&O Traders

Should F&O Traders Maintain Books Of Accounts

1. When It Becomes Mandatory

2. What You Should Maintain

F&O Loss Set Off And Carry Forward Rules

Advance Tax For F&O Traders

Can F&O Traders Claim Expenses

Example Of F&O Tax Calculation For A Salaried Trader

Should F&O Traders Choose Old Or New Tax Regime

1. New Tax Regime

2. Old Tax Regime

3. Important Consideration

Conclusion

Frequently Asked Questions (FAQs)

Is F&O income considered business income in India?