Can I use intraday profits to take additional positions on the same day?

Short Answer

Profits generated from intraday or positional trades are settled on a T+1 settlement cycle. This means you can only take additional positions from your profits on the following trading day.

Detailed Answer

Is it possible to use intraday profits to take additional positions on the same day?

In short No, It is not possible to use the intraday profits to take additional positions on the same day. To take extra positions, you will need to add additional capital to fulfill the trade.

The reason is, intraday profits are only added to your account at T+1 (Trading +1) days. This means you can only use the profits from your trade on the following date after your account has been settled.

Let's assume you make a profit of Rs 1,000 on the 20th of a particular month. Your Profits or losses are settled on a daily basis by the brokers. Hence, you will be able to use the profits only on the 21st.

This also means that any intraday or swing trade profits will only be available for deployment on the next consecutive trading day. If at all there is a trading holiday or settlement holiday, in that case, the funds will be settled into your account on the next trading date.

Therefore, you cannot use the F&O or equity profits to buy shares or trade using the same margin. To take an extra trade, you will have to either add an additional margin or use the remaining margin to take any positions.

Conclusion

Unlike losses, which are subtracted from the total margin immediately, profits are not added on the same day. You will have to wait for the next trading session to either withdraw it or use it to take additional positions.

Tagged With: settlement cycleoptions tradingequity tradingindian stock marketintraday trading
Categories: Stock Trading
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