What is Intraday Trading? Meaning, Features, Strategy, and More

Did you know only 10% of traders make money and the rest 90% lose? Intraday trading means buying and selling on the same day. It is a short-term trading method. This blog will walk you through the basics of this kind of trading and enlighten you with how it works, what strategies traders use, and its advantages and disadvantages. Furthermore, it will provide you with a brief of its profitability and accessibility, which will help beginners get started.

Intraday Trading Meaning

Intraday trading means buying and selling stocks within the same day. It is also known as day trading. There are a lot of benefits that traders gain while trading through this method. The prices keep fluctuating throughout the day, making it easier for the traders to gain profit through the price movement.

Intraday trading allows you to earn profits in the following ways:

• Since you are trading more frequently, it gives you multiple opportunities to earn more.
• Secondly, the prices are volatile and fluctuate a lot which allows you to cash on it. 
• Thirdly, you can use technical analysis to see previous trading prices, identify patterns, and predict future prices to help you earn more profit.

You can also learn stock market trading for a better understanding of the subject.

Things to Keep in Mind During Intraday Trading

A few things to keep in mind while doing intraday trading are:

• The traders have to be very keen about the price movements in the market as it keeps fluctuating throughout the day. 
• It is done within a particular day. Therefore, you need to be focused on the trading standards themselves. All the work related to this trade has to be completed by the end of the day. 
• The traders should look out for opportunities for profit and make a list of these opportunities. 
• They should be very prompt with decision-making and shortlist intraday trading strategies while placing trades. 
• They should also be aware of the process of monitoring and closing the position in time for maximum profit.

Features of Intraday Trading

There are a lot of features that make this type of trading a popular choice among traders. Some of the reasons are as follows:

• It is a short-term trading method, which means that the traders do not have to invest a lot of time to gain profit.
• It needs quick decision-making, a skill that only experienced traders possess.
• Risk management techniques are used frequently by traders.
• The profit gained is huge if done optimally. 
• The prices fluctuate quickly indicating that it is very volatile.
• The traders use leverage to increase their capital.

How To Do Intraday Trading?

To get started, you need to open two accounts, one for trading and another for DEMAT. If you are experienced with the stock market and would like to try intraday trading, it is better to have a separate account to track your trades easily. Additionally, tax calculations become simpler as taxes on intraday trades differ from other types of investments. 

Once you have an account, get some tools to assist you. Before starting to trade, take a look at daily charts so that you are familiar with the change in prices. Some technical analysis tools might also be useful.

Here is a step-by-step guide on how to do intraday trading:

• Open a trading account with a broker ensuring you have the necessary information about the best discount brokers in India.
• Maintain an appropriate margin balance in your account for intraday trades. This may range from 4x to 20x leverage depending on the type of trade (regular/MIS). 
• Create and manage opportunities by forming separate watchlists for particular shares and assets intended for day-trading use only.  
• Choose market orders at current prices, limit orders at chosen prices, and normal versus MIS orders, all while taking into consideration varying margin requirements as applicable to each kind of order placed.  
• Verify that your order is either placed successfully, canceled, or executed through regular monitoring.
• Lastly, remain wary regarding profitable chances and setting stop loss limits, which helps ensure successful gains throughout daily changing transactions.

Intraday Trading Tips For Beginners

If you have been looking to start investing in intraday trading as a beginner, then you must have an adequate understanding of its basics. The following points explain what you are required to learn as a beginner:

• You must have a basic knowledge of this subject and understand how it works.
• Be sure to choose a broker to have a good start.
• Make a plan for strategic trading.
• Start small so you can minimize loss if there occurs a situation like that.
• Make records to keep track of trading.
• Learn to manage risks.

Benefits of Intraday Trading

Intraday trading is a very profitable trading method. Some of its advantages are as follows:

1. High Profits: As there is small price movement in the market, traders can take advantage of this and make huge profits in a small amount of time.
2. Flexibility: Traders have the flexibility to choose when they want to trade. They can trade during regular trading hours or even after hours.
3. Low Cost: Traders only need to pay a small amount of the overall trade value, which is generally a very small percentage. This makes intraday trading a cost-effective method of trading.
4. Access to Diversified Market: Traders have access to various markets, stocks, currencies, etc.
5. Easy Exit: Intraday trading allows the traders to exit the markets quickly, helping in minimizing the loss and earning more profits.

Drawbacks of Intraday Trading

Following are some of the disadvantages of intraday trading:

1. Requires Time: Traders need to monitor the market constantly. This can sometimes become difficult while managing other responsibilities.
2. Requires Knowledge and Experience: It requires immense knowledge and expertise as to which share can perform well, which will not, and what will help gain the maximum profit, which comes from experience.
3. High Risk: The market cannot be trusted. It can move unexpectedly and the traders can lose a lot of money.
4. Can be addictive: The excitement of quick and large profits can make this trading addictive. Traders should be careful while trading and realize that it is also a high-risk activity.

Intraday Trading Strategies

The strategies involved in trading are based on the methods that work best to generate profit from that particular method. The following are some of the strategies in this trading:

• Momentum Trading: It works by buying stocks that are marginally upwards and selling the ones that are going downwards, it keeps the momentum of profit active.
• Gap Trading: This strategy is used by traders that have a huge gap in prices. It works by buying a stock that opens higher and selling it when it opens lower.
• Breakout Trading: This technique revolves around buying a trade that breaks out and then selling it later when it reaches a higher resistance level.
• News-Based Trading: This strategy is helpful for traders when they have been constantly paying attention to new events that will eventually affect the market.

Conclusion 

Intraday trading can be a very profitable way of earning money in a short period, however, there are several risks associated as well as the market keeps changing and prices are volatile. It is important to understand the market, do your research and understand the risks involved.