What Is Traded Value?
3 min readTraded value is calculated by adding the total purchasing price and total selling price of traded volume in a day. Traded volume is the number of shares traded during a given period.
As a beginner, “traded value on CM” mentioned in the message from your stockbroker may panic you. When you trade in the stock market, you receive an SMS from your stockbroker mentioning the Traded Value for the day after the market closes. CM refers to the term “cash market.” This SMS may panic a new entrant in the stock trading as it is a higher amount than you have traded with and different from reflected in your online demat account. It is not an error from your stockbroker. It is the result of the calculation of traded value.
Traded Value at Individual Level
Let us take an example for clarity of the concept and calculation.
Suppose you bought 200 shares for Rs.100 each and sold 200 shares for Rs.110.
Purchase Value = 200*100=Rs.20,000
Selling Value = 200*110=22,000
Traded Value = Rs.42,000
In the case of an individual, the trade value is the total purchasing price and selling price of the traded stocks in a trading session. This traded value won’t affect your income tax calculation. The trade value is also quoted as Total Turnover.
Traded Value at Economic Level
Definition: The value of stocks traded represents the transfer of ownership effected through the stock exchange’s electronic order book (EOB) in an economy in a year.
Description: When it comes to traded value at the economic level, it is the total value of all traded stocks on the stock exchanges in the capital market in a year. Here only one side of the transaction is considered, unlike individual traded value. It includes the stock traded both domestically and internationally. It is the Gross Domestic Product (GDP) percentage of the economy.
After the basics of traded value, let us come to intraday trading.
How to do Intraday Trading
It is a guide for beginners; therefore, let us start with what intraday trading is.
In the intraday, traders have to close their position within the same trading session irrespective of profit or loss. In contrast, traders can remain invested in regular trading for a period as long as they want. A day trader can not hold a security for even a night. If a day trader forgets to square off the position, it will be closed on its own at the prevailing rate available for the security. It may result in huge losses for a trader.
Picking stocks for intraday trading: Pick quite liquid stocks that can be available to sell whenever you want. You require volatile stocks to make a profit. Better to find some good volatile stocks.
Entry at the right time: Traders need to follow the prevalent trends to find a low-risk entry point with a high potential for gain. They should be experienced enough in the stock market to identify the right time to enter and exit a trade.
Stop losses as an exit strategy: Without a strategy, it is near too impossible to exit with a profit. However, identifying the right time to exit is tact that comes after a long experience in the market. A Stop-loss strategy can help you exit when you have reached the target price to make a profit or at a point of maximum loss.
Rules for Intraday Trading
- First, focus on protecting your invested capital rather than making profits.
- Marginal trading is not always good for everyone.
- Research on your own instead of relying on your knowns or brokers.
- Make a record of our profitable trades and losses also.
- Know the business which stocks you want to trade. It will help you to catch the momentum.
Thus, day trading will be an effective way if you follow your trading strategy considering the above-specified rules. You can look for a low brokerage trading account to save on trading costs.
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