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What Is Intraday Trading?

What Is Intraday Trading

“Nothing comes too quickly in life” well, this might be a little different when we talk of intraday trading. So, what is intraday trading? Is it safe and capable of generating profits in a small time?

Intraday trading or day trading is more or less like a T-20 match, in which everything happens quickly and the excitement never dies.

Intraday Trading, or day trading as it is properly known, is the buying and selling of shares in a single market session or in a single day. This means that if you are buying a stock at the opening of the market, you have to sell this before the market session ends.

If you are still confused, let us understand the basics of intraday trading carefully.

What is Intraday Trading Meaning?

The share market has different investment options, and when you are investing your money in stocks, there are different trading types as well. Intraday trading is a favorite trading style for people who are looking for greater profits in a shorter duration.

Day trading or intraday trading, as the name suggests, is the buying and selling of shares on the same day.

It is quite clear that the share market fluctuates the entire day. Sometimes there are massive fluctuations within seconds as well.

This is where the intraday traders come into play. In intraday trading, the traders are looking for opportunities where they can make significant gains in a limited time slot.

Although it is considered a little risky for beginners or even experienced traders, it can yield potential gains if done the right way.

So what is the right way? Well, there is no defined plan, your profit in intraday trading depends upon your knowledge and understanding and further the way of how to select stocks for intraday trading.

Once you practice and become well-versed with it, success is more likely. You can do that with the help of technical analysis for intraday trading and a lot of practice.

Now that we know what is intraday trading let’s grab its better understanding with intraday trading example.

What is Intraday Trading Example

Intraday trading is a very fast and exciting trading segment. If you are still confused, what is intraday trading, let us understand intraday trading with the help of an example and how it gives the traders an opportunity to gain profits.

Let us assume that you wanted to trade in the Pharma sector and, therefore, after proper research, selected the stock of Sun pharma.

The market price of the same was ₹400 at the time of your purchase. Accordingly, you purchase 100 shares of the same. On the same day, the price fluctuated and reached ₹420, and therefore you squared off your position, making a profit of ₹2000.

Later that day, the price of the same dipped to ₹410, and so you purchased it again and then sold all the shares for ₹440, making a profit of ₹3000.

In the above example, you earned a good profit by practicing multiple trades in the same company. This is how you can trade intraday and reap the best opportunity to make a profit using multiple trades.

So you bought at a lower price and then sold it at a higher price.

But, wait! This is not the only way in which you can earn good profits in intraday trading.

You can also earn profits from the falling market in intraday trading.

Wondering how it is possible?

This trading style is called short selling. In this, you sell the shares first and then purchase them. The broker does the selling on behalf of the trader. Let us understand this with the help of an example.

Suppose the price of Sun pharma is trailing around ₹500, but the market after this has slowly started falling.

In this case, if you sell 50 shares, you will sell them for. 25,000. Now on the same day, the price dipped to ₹450. So now you purchase 50 shares for ₹22,500. What is your profit in this case?

The difference between the selling and buying price, which is ₹2,500, is the profit that you bagged from the falling market.

So, these are the ways in which you can maximize your profits in intraday trading. Now, what if you don’t have enough trading capital?

Intraday trading has a solution for that as well. Let us have a quick look on how to start intraday trading.

How to Do Intraday Trading?

Now that we have discussed what is intraday trading, it is also essential to learn how you can efficiently do intraday trading. Let us now have a quick look at how you can start intraday trading.

  • The first step is to open an account. You can easily open your Demat and trading account with Choice Broking. For the process, you need some documents including your PAN card, Aadhar card, and a savings bank account.
  • After you have successfully opened your account, you can log in to the Jiffy app by Choice Broking. For here you can easily choose the right stock and start trading.
  • You get a wide range of trading chart types and indicators in the Jiffy app that will aid your stock selection.
  • Now you can select the buy/sell option. Enter the price and quantity and click on submit.
  • You also get access to various orders like bracket orders, cover orders, stop-loss orders to minimize your loss and increase your profits.

So, by using the simple steps described above you can trade in intraday stocks.

How to Make Money in Intraday Trading?

Now you learn to do intraday trade, here comes the next challenge of how to make money in day trading.

Well! that is not easy but following the right rules of intraday trading and a few tips you can increase the chance of making a profit.

So, let’s have a look at the ways of how to make money in intraday trading.

  • Set your goals.
  • Do proper research
  • Stay updated with the market news
  • Pick the best time frame for intraday trade.
  • Trade-in volume

Now when it comes to trade-in volume, of course, you need a large capital. For this, you can rely on or reap the benefit of intraday margin.

Thinking of what is margin in Intraday trading.

Let’s have a quick overview of the same to understand the concept.

What is Leverage in Intraday Trading?

Have you ever considered taking a bank loan? If yes, then you must be aware of how it works. Although you can start investing in the share market with 100 rs as well, intraday trading is always beneficial when dealing with volumes.

What if you don’t have enough amount for intraday trading? You do not have to worry because your stockbroker comes to your rescue here. You have a facility of leverage that gives you the opportunity to trade. Now you must be wondering, what is intraday trading leverage?

Leverage or margin works like a bank loan, and you can easily avail it and increase your profits. According to the SEBI new rules for intraday margin, a broker is allowed to give the leverage of a maximum of 5X. This means that you can trade with 5 times more money than you already have.

Let us understand this with the help of an example.

Suppose you have ₹10,000 available for trading, and you have to purchase the shares of the company XYZ. Now the current market price of one share is ₹200. So, with ₹10,000, you will be able to purchase 50 shares. Now the price of the stocks increases to ₹250 on the same day. So you decided to sell off all the 50 shares for ₹12,500. In this case, your today intraday trading profit will be ₹2,500.

Now imagine if you would have traded with the margin facility. Instead of ₹10,000, you can now trade with ₹50,000. Suppose buying the same company’s shares at the same price and then selling it at the same price. In this case, the profit would have been ₹12,500.

In this case, the margin facilities can actually help a trader in earning more profits. You can start trading using margin with Choice Broking.

What is Intraday Trading Time

Now that we know that the buying and selling of the securities on the same day is intraday trading. The next question is, what is intraday trading time?

So, the Indian stock market session starts at 9:15 AM and ends at 3:30 PM. This means that if you want to execute an intraday trade, you have to do it in this time window.

In case, you forget to exit the position before the trading session ends, then it gets auto-squared off for which the broker charges you a penalty called auto-square off charges.

Just in case you wish to hold the securities, you can convert the order into a delivery trade.

Although the intraday trading window is open for almost 6 hours, can you trade at any time or is there the best time frame for intraday trading?

Well! it depends, however, to make the best profit one can consider the early market session from 9:30 AM- 10:30 AM to trade in intraday stocks.

Thinking why?

This is because the volatility and liquidity is generally higher at this time of the day. Most of the intraday traders, thus consider this time to be the best time to do trade and earn profit.

If you are a beginner trader, it is advisable for you to wait and observe the market for the initial 15 minutes.

During this time, the market reacts to the news of the previous day or early morning. In addition to this, the experienced traders also make the most out of this time. So as a beginner, you can observe the market and then react accordingly.

So, if you enter the market at the right time and exit at the right time as well, you will be able to earn good profits.

Although the intraday trading profit settlement will take place after T+1 days, you can use that amount for further trading or withdraw it.

What is The Benefit of Intraday Trading

Now a lot of people question, is intraday trading profitable? Where there can be several answers attached to the same, it is profitable if the right intraday trading strategies are used.

Let us have a look at the advantages of intraday trading.

  • No overnight risk- In intraday trading, you are not holding your positions and selling them on the same day. This prevents you from worrying about what will happen with your stock after the market closes or in the early morning.
  • Earn from the bearish market- In intraday trading, you cannot just earn when the market moves upwards but also make money from the falling market. This concept is known as short selling, wherein you sell the stocks first at a higher price and then purchase them at a lower price.
  • Use of Margin- You can use the margin facility for intraday trading and trade with an extra amount. This enables you to multiply your profits as well.
  • Source of Income- A lot of traders do intraday trading full-time. So once you master the art of intraday trading, you can easily make this your active source of income.

What are the Disadvantages of Intraday Trading

Nothing can be perfect, and so is intraday trading. There are indeed a lot of advantages attached to intraday trading, but on the contrary, there are some disadvantages as well. So let us quickly go through the disadvantages of intraday trading.

  • Risk from volatility- Now, in intraday trading, the market is very volatile. So the reward ratio is high in intraday trading, but the risk as well. Severe fluctuations can also cause you to lose money in intraday trading.
  • Emotions can overpower- Intraday trading requires you to make quick decisions. Sometimes a trader might wait for more profit but, in turn, end up losing capital. Too much greed can ruin profits.
  • Believing the wrong tips-A lot of intraday trading tips are available, and if you believe in everything without research, you can lose money. Rumors can also force the traders to panic sell and therefore end up losing money.

Conclusion

What is intraday trading has a simple answer: the buying and selling of shares on the same day between 9:15 in the morning till 3:30 in the afternoon.

You can make use of different strategies, patterns, indicators, etc., to ace intraday trading. It is considered risky because a trader tries to ride the market trend, which can also backfire.

But with the correct methods, intraday trading is a blessing in disguise.

So, if you are also looking to start intraday trading, open your Demat account today.

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