Meaning of Intraday trading
Intraday Trading Meaning the Intraday Trading System where trader has to buy and sell transaction on the same day before market gets close. As the name suggests trader have to square off the trade on the same day. The Day trading is also referred as day trading by many traders.
How intraday trading works?
Suppose that Mr. Anil have bought 100 stocks of XYZ limited during the open market hours, and then Anil have to sell the same no. of stocks of XYZ limited before market closure. Same is the case when trader has sold the stocks, then he compulsorily have to buy the same quantity of the stock that have sold earlier.
When the trading is done through online platform, the trader has to explicitly specify that it is intraday transaction while placing the order. However in case of a buy transaction the trader have the option to change it to 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 don’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 day trading segment
- There is high margin available for intraday trading (eg. If the traders have Rs. 5000 in bank account, he will be allowed to do the transactions worth multiple times of the value. The ratio varies as per the different policy of brokerage firms. Some of the brokerage firms allow upto 10 times margin.)
- Traders don’t want to carry the positions overnight as the stock price might have gap up or gap down the next day.
Intraday trading Strategy:
Traders follow different styles for intraday trading.
Don’t Miss It – Best Formula of Intraday Trading Techniques
- Some of the traders have short term goal and exit the position once they reach 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 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 buy 50 stocks of some company on 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 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 same day (sell same no. of stocks)
Intraday Trading for New Trader
Many new traders in the stock market find intraday trading software as attractive option and look as an opportunity to earn good profit on daily basis.
Lastly Intraday trading is not that easy as it sounds. The profit can be earned with lots of hard-work and discipline approach. For More trading knowledge read on www.niftytradingacademy.com or call us anytime on 1800 123 6343.
I am Hitendra Dixit. I am a civil engineer, at the age of 47 I have changed my profession and came in to stock market. I got excellence award for best share market training institute in India. I provide training in live market, during training sessions I do trade with real money in front of members. Many of my members left their job and became a professional trader with my support and guidance.