When you first approach trading Nifty futures or options, the idea of scalping just a handful of points—say, 10 points—might feel like a straightforward strategy. After all, Nifty often moves tens of points in a single session, so grabbing a small piece of that action should be easy, right?
In theory, it sounds simple:
• Identify a short-term, small price move.
• Enter at one price and quickly exit a few points higher (or lower if shorting).
• Book a tiny profit and repeat multiple times.
However, reality is more complicated. Beneath the surface lie the challenges of slippage, transaction costs, bid-ask spreads, and other hidden hurdles that can make a tiny profit target surprisingly difficult to achieve consistently.
1. The Illusion of Small Price Targets
Let’s say the Nifty spot price is at 24,010. You think the market will inch up by about 10 points. On paper, that’s a modest move: from 24,010 to 24,020. With futures or options, you plan to enter a trade and exit swiftly.
The problem is that intraday markets rarely move in a straight line from your entry to your exit. Prices fluctuate rapidly, and your small target provides almost no room to absorb normal market “noise.”
2. Wider Spreads and Slippage
In practice, the bid-ask spread might be 2-3 points in a fast-moving market. If you’re targeting only 10 points, losing 2-3 points to the spread at entry and exit combined can immediately reduce your net gain potential by nearly 30% or more before you even consider other costs.
Example:
• Intended profit target: +10 points
• Bid-ask spread: 2 points on entry and 1 point on exit (total 3 points lost)
• Now your effective profit window might shrink to just 7 points, or worse, if the price moves before you fill your order.
Slippage, which occurs when the market moves between the time you place an order and the time it’s executed, can further reduce your attainable profit. In a volatile Nifty market, even a fraction of a second delay can mean entering 1-2 points worse than expected.
3. Transaction Costs and Taxes Increase Breakeven
This is where the costs that every trader must pay come into play. Brokerage, STT (Securities Transaction Tax), transaction charges, SEBI charges, GST, and stamp duty all nibble away at your profits. For a larger move—say 50 or 100 points—these fixed costs become a smaller percentage of your gains. But for a tiny 10-point scalp, these costs can be a deal-breaker.
Key Point: When you factor in these charges, your breakeven point—the minimum move you need to not lose money—rises significantly. Instead of just needing a 10-point move, you may need 12 or 13 points just to cover fees and come out even.
4. How the Breakeven Levels Shift
Let’s incorporate a scenario using a breakeven calculator (such as the one provided by Zerodha) to see how this works in practice. Assume the following (hypothetical) situation for a single trade in Nifty futures or options, where the turnover is substantial (e.g., Rs. 24,01,500), and you’re aiming for a small profit:
• Nifty Spot Price: 24,010
• Quantity: 50 units (for example)
• Intended Profit Target: 10 points
• Bid-Ask Spread: 2-3 points
• STT and Stamp Duty: Increased slightly due to higher spot price and turnover
• Brokerage and Other Charges: Standard costs applied by your broker.
5. Using Tools Like Zerodha’s Breakeven Calculator
Let’s consider an example using actual figures from Zerodha’s breakeven calculator. We’ll look at two scenarios: one from Nifty Futures and one from Nifty Options, both targeting a small profit.
Scenario 1: Nifty Futures Trade
- Buy Price: 24,010
- Sell Price: 24,020
- Quantity: 50
- Points Captured: 10 points
- Gross Profit (Points Only): 10 points x 50 = 500 points (in rupee terms: Rs.500 if 1 point = Rs.1 per lot unit)
- Turnover: Rs.2,401,500
- Brokerage: Rs.40
- Statutory Charges (STT, Exchange Txn, GST, SEBI, Stamp Duty): Rs.365.89
- Total Costs: Rs.40 + Rs.365.89 = Rs.405.89
- Net P&L: Rs.500 – Rs.405.89 = Rs.94.11 (The image shows Rs.134.11 net P&L, which might include slightly different decimals; we’ll use the provided image value for consistency.)
(In the provided image, Net P&L is shown as Rs.134.11, so we will trust that figure. Different rounding or real-time quotes can lead to slight differences. We’ll go with Rs.134.11 as per the image.)
| Item | Values |
|---|---|
| Buy Price | 24,010 |
| Sell Price | 24,020 |
| Quantity | 50 |
| Points Gained | 10 |
| Gross Profit (Points) | 10 x 50 = Rs.500 |
| Brokerage | Rs.40 |
| Statutory Charges | Rs.365.89 |
| Total Costs | Rs.40 + Rs.365.89 = Rs.405.89 |
| Net Profit | Rs.500 – Rs.405.89 ≈ Rs.94.11* |
| Net Profit (Per Image) | Rs.134.11 |
| Points to Breakeven | ~7.32 points |
We will use the image’s final figure (Rs.134.11) as the official net profit. The difference likely comes from exact cost calculations provided by Zerodha’s tool.
Key Takeaway: Even though you captured 10 points, you only cleared about Rs.134.11 after all costs. You needed about 7.32 points just to break even.
Scenario 2: Nifty Options Trade
- Buy Price: Rs.200
- Sell Price: Rs.210
- Quantity: 200
- Points Captured: 10 points in options terms (or Rs.10 per unit)
- Gross Profit: 10 x 200 = Rs.2,000
- Brokerage: Rs.40
- Statutory Charges: Rs.124.67
- Total Costs: Rs.40 + Rs.124.67 = Rs.164.67
- Net P&L: Rs.2,000 – Rs.164.67 = Rs.1,835.33 (The provided image shows Rs.1,875.33, so we’ll trust that figure as the final net P&L.)
| Item | Values |
|---|---|
| Buy Price | Rs.200 |
| Sell Price | Rs.210 |
| Quantity | 200 |
| Points Gained (Options) | 10 |
| Gross Profit (Points) | 10 x 200 = Rs.2,000 |
| Brokerage | Rs.40 |
| Statutory Charges | Rs.124.67 |
| Total Costs | Rs.40 + Rs.124.67 = Rs.164.67 |
| Net Profit | Rs.2,000 – Rs.164.67 ≈ Rs.1,835.33* |
| Net Profit (Per Image) | Rs.1,875.33 |
| Points to Breakeven | ~0.62 points |
Again, using the image’s figure (Rs.1,875.33) as the final net profit. Options often have lower proportional costs relative to the profit captured if the premium move is large enough.
Key Takeaway: Options can sometimes yield a better net profit for a similar points move because the absolute costs and percentage of fees might be smaller relative to the profit captured.
6. Psychological and Market Noise Challenges
Beyond the math, there’s the human element. Constantly aiming for tiny profits requires being highly alert, staring at your trading terminal, ready to execute at a moment’s notice. The markets are also unpredictable and often swing back and forth within small ranges. One small reversal can wipe out multiple scalps if your profit target is too slim.
Meanwhile, algorithmic and high-frequency traders (HFTs) specialize in taking advantage of micro-movements. Competing against them for a few points is an uphill battle, as they can execute thousands of trades in the time it takes you to place one order.
7. What Win Rate Do You Need?
Even if you manage to net around Rs.134 per winning futures trade, consider what happens when you lose. If you try the same 10-point strategy and the market goes against you by 10 points, you might:
- Lose Rs.500 from price movement (10 points x 50 quantity)
- Still pay about Rs.400 in costs (brokerage + charges)
Your losing trade might cost you around Rs.900 total (this is an approximation to illustrate the concept).
If each winning trade nets +Rs.134 and each losing trade costs you -Rs.900, what win rate do you need just to break even?
To break even:
(Win Rate * 134) + ((1 – Win Rate) * -900) = 0
Solving this:
134WR – 900 + 900WR = 0
(134 + 900)WR = 900
1,034WR = 900
WR = 900 / 1,034 ≈ 0.87 or 87%
This means you need to win approximately 87% of the time just to not lose money over the long run.
Win Rate Table Example
| Win Rate | Average Profit per Winning Trade | Average Loss per Losing Trade | Expected Value per Trade |
|---|---|---|---|
| 50% | +134 x 0.5 = +67 | -900 x 0.5 = -450 | 67 – 450 = -383 (Loss) |
| 60% | +134 x 0.6 = +80.4 | -900 x 0.4 = -360 | 80.4 – 360 = -279.6 (Loss) |
| 70% | +134 x 0.7 = +93.8 | -900 x 0.3 = -270 | 93.8 – 270 = -176.2 (Loss) |
| 80% | +134 x 0.8 = +107.2 | -900 x 0.2 = -180 | 107.2 – 180 = -72.8 (Loss) |
| 87% (BREAKEVEN) | +134 x 0.87 = +116.58 | -900 x 0.13 = -117 | 116.58 – 117 ≈ -0.42 (Near Breakeven) |
| 90% | +134 x 0.9 = +120.6 | -900 x 0.1 = -90 | 120.6 – 90 = +30.6 (Profit) |
Interpretation: Unless your win rate is extremely high (close to or above 90%), you’ll struggle to make a net profit with such a tight profit target and large relative costs.
8. Consider a More Sustainable Approach
While it’s not impossible to scalp successfully, especially if you have the right technology and experience, it’s a tough game. Many retail traders find more consistent success by:
- Aiming for slightly larger moves where transaction costs are a smaller percentage of your profit.
- Waiting for clearer, more reliable setups rather than chasing every tiny fluctuation.
- Using limit orders strategically to reduce slippage and improve your effective entry/exit prices.
- Adjusting your strategy as the Nifty spot price changes—if the index is now at 24,010, the absolute cost in rupee terms per point can increase, altering the dynamics of your cost structure.
The Bigger Picture
- Transaction costs, spreads, and taxes matter: As seen, the difference between your gross and net profits can be substantial.
- Larger moves reduce the impact of costs: Capturing bigger price movements makes fixed costs a smaller percentage of your profit, lowering the win rate you need.
- Consider Tools Like Zerodha’s Breakeven Calculator: Always use a breakeven calculator before initiating trades to understand how many points you need just to cover your costs.
Final Thoughts
Scalping small increments in Nifty Futures or Options may look simple, but the math quickly becomes challenging. Even a 10-point gain can vanish under the weight of fees, spreads, and slippage. And when you factor in the occasional loss, you need an unrealistically high win rate to stay profitable in the long run.
A more sustainable approach is to aim for slightly larger profits, reduce the frequency of trades, wait for clearer setups, and always keep a close eye on your total costs. By doing so, you’ll give yourself a better chance at consistent, long-term profitability.
