In swing trading, the investing capital you need is much more than in intraday trading, because the facility of margins is not available in Swing trading. However, in swing trading, the stop loss price and target price are usually further away from the entry price and hence, losses incurred can be huge.

Speculation is the buying of an asset or financial instrument with the hope that the price of the asset or financial instrument will increase in the future. They also tend to be more active market traders – often seeking to profit from short-term price fluctuations – as opposed to being “buy and hold” investors.

Swing trading is a speculative trading strategy in financial markets where a tradable asset is held for one or more days in an effort to profit from price changes or ‘swings’. Profits can be sought by either buying an asset or short selling.

Daniel J. Zanger

It states that a transaction of purchase or sale of a commodity including stocks and shares settled otherwise than by actual delivery or transfer of the commodity or scrip is a speculative transaction. The profit or loss on sale of such shares is taxed as short-term capital gain.

Treatment of loss from speculative business Further, loss from a speculation business carried forward to a subsequent year can be set off only against the profit and gains of any speculative business in the subsequent year.

It is considered as speculative as you would be trading without the intention of taking delivery of the contract. Non-speculative business income – Income from trading F&O (both intraday and overnight) on all the exchanges are considered as non-speculative business income as it has been specifically defined this way.

Profits made from intraday trading of equity shares are classified as speculative income. This is so because those investing in a stock for less than a day are presumably not investing in the company but only keen on speculating its price volatility to turn a profit.

Therefore, income from intraday trades is considered to be ‘business income’ and not ‘capital gain’. Let’s look at an example to understand the tax liability better….Example 1.

Simple method for intraday profit calculation is, Just add both the total buy and sell value, and make 0.04℅ of it, that will be your all brokerage charges etc.