Intraday trading as the name suggests refers to the trading system where you have to square-off your
trade on the same day. Squaring off the trade means that you have to do the buy and sell or sell and buy
transaction on the same day before the market close.Intraday Trading is also referred to as Day trading
by many traders.
In online trading platforms when you are making an intraday transaction,you have to explicitly specify
that it is a Intraday transaction while placing the order. However in case of a buy transaction you always
have the option to change it to delivery later before the market close.
Advantages of Intraday Trading
- Brokerage charges for the stocks traded under the day trading segment are very less than Delivery segment.
- High Margin is available for Day trading (eg.If you have Rs.5000 in your account,you will be
allowed to do transactions worth multiple times of this value.This ratio varies as per the policy
of the Brokerage firms.Some of the brokerage firms even allow upto 10 times margin)
- They do not want to carry their positions overnight as the stock price might be impacted due to
some other event and open with a gap up or gap down the next day.
Intraday Trading Techniques
There are various styles of trading followed by the traders for Intraday trading.
- Some traders focus on very short term and exit the position once they reach minimum level of
profit.Such traders usually rely on Volume of transactions to make a substantial profit.They carry
out multiple buy and sell trades and sometimes exit the position within minutes.
- Some traders rely on the trend for Intraday trading and usually are much more patient and
make fewer transactions.
- 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.