Meaning of Intraday Trading
Intraday Trading Meaning the Intraday Trading System where the trader has to buy and sell transaction on the same day before the market gets close. As the name suggests traders have to square off the trade on the same day. Day trading is also referred to as day trading by many traders.
How does Intraday Trading Work?
Suppose that Mr. Anil has bought 100 stocks of XYZ limited during the open market hours, and then Anil has to sell the same no. of stocks of XYZ limited before the market closure. The same is the case when the trader has sold the stocks, then he compulsorily has to buy the same quantity of the stock that has sold earlier.
When the trading is done through an online platform, the trader has to explicitly specify that it is an intraday transaction while placing the order. However, in the case of a buy transaction, the trader has the option to change it to a delivery option before the market gets close.
Also, Read – How to Pick Best Stocks for Intraday Trading?
Also in most of the online trading platforms positions bought under intraday trading are squared off automatically before the trader doesn’t perform the transaction before the market closure.
Reasons why traders find Intraday lucrative
- Brokerage charges are very less than delivery segment for the stocks traded under the day trading segment
- There is a high margin available for intraday trading (eg. If the traders have Rs. 5000 in a bank account, he will be allowed to do the transactions worth multiple times the value. The ratio varies as per the different policies of brokerage firms. Some of the brokerage firms allow up to 10 times margin.)
- Traders don’t want to carry the positions overnight as the stock price might have a gap up or a gap down the next day.
Intraday Trading Strategy:
Traders follow different styles for intraday trading.
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- Some of the traders have a short-term goals and exit the position once they reach a minimum level of profit. Such traders rely on the volume of transactions in order to make a substantial profit.
- Some traders are much more patient and make fewer transactions because they rely on the trend for intraday trading.
- Very few traders look for Intraday trading in case of a major event when a particular stock is supposed to go up or down based on some event.
- Few traders resort to Intraday trading only in the case of some major event when a particular stock is supposed to go up or down based on some event.
Which is better for buying stocks?
Intraday vs. Delivery Trading
If the trader buys 50 stocks of some company on a delivery basis, the stocks will be transferred to his Demat Account (2-3 days to complete transfer) and can do whatever he wants to with the stocks. The trader can keep them for 5 years or can sell them the very next week.
Must Read – Day Trading Tips for Beginners
In day trading the stocks are not actually transferred to trader account and need to square off the position before the market close on the same day need the sell the same no of stocks.
In Intraday trading stocks are not actually transferred to your account and you have to square off your position before the market close on the same day (sell the same no. of stocks)
Intraday Trading for New Trader
Many new traders in the stock market find intraday trading software as an attractive option and look like an opportunity to earn good profit on a daily basis.
Lastly, Intraday trading is not that easy as it sounds. The profit can be earned with lots of hard work and a disciplined approach. For More trading knowledge read on www.niftytradingacademy.com or call us anytime on 1800 123 6343.