Advantages of Intraday Trading

Intraday trading is always seen as a danger zone not just for beginner traders but also experienced traders as well. But just like every coin has two sides, don’t you think that we should also pay attention to the advantages of intraday trading?

Now, have you ever dreaded a test and then absolutely aced it? If yes, you know that there is a different joy in cracking the most difficult deals and achieving something that initially looked like earlier.

If you are also someone who has dwelled on the cons of intraday trading for a long time now, it is time to shed some light on the advantages of intraday trading.

So, let’s begin!

What Are The Benefits Of Intraday Trading?

Before diving into the numerous benefits of intraday trading, let us quickly revise the basics. Intraday trading or day trading is the buying and selling or vice versa of shares in a single day. The intraday trading time or the trading window that you have is from 9:15 AM to 3:30 PM.

Let us now talk about the advantages of intraday trading.

1. No Overnight Risk

Now that we know that in intraday trading you don’t have to keep the shares in your Demat account, there is no overnight risk involved.

There is no need to think about how the market will open tomorrow. You will also stay worry-free even if some major news or announcement happens after the market closes.

You don’t invest your money in the shares so it takes away the worry of how the company is going to perform in the future. The only motive in intraday trading is to analyse the technical aspects, buy the best intraday stocks and finally make use of the subsequent gains and then enjoy it.

This is one of the biggest advantages of intraday trading as every new day brings a new opportunity and you don’t have to stay hooked to the same share.

2. Short Selling

The most daunting thought in the mind of every trader is the idea of incurring losses when the market moves against the sentiments. But what if intraday trading gives you a chance to turn this bane into a boon?

Yes, unlike delivery trading, you can earn profits in the bearish market in intraday trading. This process is commonly known as short selling. Short selling requires a trader to sell the shares first at a higher price and then purchase the same when the prices drop.

The profit generated is the difference between the selling and the buying price.

Note- The shares have to be sold and then bought on the same day.

3. Margin Facility

In intraday trading, you can use margin and trade using the same. This is an added intraday trading benefit because even if you don’t have a major chunk of capital.

Choice gives you a 5x margin. This means that if you have ₹10,000 to trade, you can trade up to ₹50,000 with margin.

Wondering how does it benefit the intraday traders?

Suppose you have ₹10,000 capital to trade. Now you bought 10 shares of XYZ company for ₹1000 each. The price of the same reached ₹1020 on the same day. So you decided to sell it off. The profit earned in this case will be ₹200.

Now imagine if you trade using the margin. Now the traded capital becomes ₹50,000. So now you can purchase 50 shares of ₹1000 each. On the same day, the price reached ₹1020. In this case, the profit will increase to ₹1000.

In this way, margin trading can help intraday traders to generate a good profit.

4. Source of Income

If you use the right intraday strategies and do it full-time, you can easily make this an active source of income. There are traders who have made a fortune with only intraday trading.

It does require you to choose the best time frame for intraday trading, the right strategies, research, and a lot of dedication.

It is obvious that there are some risks associated with intraday trading but the high reward potential makes it all worth it.

5. Learning Potential

One advantage of intraday trading that a lot of people don’t talk about generally is the learning potential that it has. You read about the economy, the market news, announcements, etc to track the growth potential of stocks.

All this research helps a trader gain, not just market insight but also increase general awareness.

Intraday trading is all about trading with respect to the market trends and knowing about the happenings every day also helps in generating that profit.

Now all these points are enough to validate that no matter the risk associated with intraday trading, there are certain advantages as well.

Is Intraday Trading Profitable?

Another question that comes to a trader’s mind is how to make money in intraday trading or whether intraday trading is profitable or not? The answer is yes, intraday trading is profitable but you have to keep certain points in mind.

• Know your goals and risk appetite.
• Learn how to select stocks for intraday trading.
• Use the right strategies and stick to one. It is often seen that traders switch from one strategy to another very soon. It is always beneficial to pick a strategy and then try it for some time.
• Don’t start trading with a lot of capital. Learn and then proceed.
• Pay special attention to the stock selection.
• There are no DP charges in Intraday trading

If you keep these points in mind, then the intraday profit can reap great results.

Conclusion

Have you heard, higher the risk, the higher the profit? It is very true when we talk about intraday trading. It is essential that a trader understands the intraday trading advantages so that the fear of stumbling on losses also gets reduced over time.

You can not only gain higher returns but also get accustomed to detailed market insights. In all, there are multiple advantages associated with intraday trading.

If you are convinced enough, then open your Demat account and start trading today!