What is Intraday Trading? How to do Day Trading? Are you also thinking of doing intraday trading? But you don’t know much about day trading. Then let us tell you today what is intraday trading? how to make it? Also, I will give detailed information about the advantages and disadvantages of doing intraday.
What is Intraday Trading?
In intraday trading, shares of any company are bought and sold for a single trading day. That’s why it is also called Day Trading. Intraday traders or day traders try to earn profit by buying and selling shares due to fluctuations in share prices in a day.
If explained in simple words, intraday trading means intraday traders buy shares after the market opens and sell them just before the market closes. If you do not sell your shares, your broker automatically squares off the position. On the other hand, if you have bought shares on NRML, then your broker will convert the position into a delivery trade.
For example, suppose after the market opens, you buy 500 shares of a company for Rs 1000. If you think this stock will go to 1010 today. As soon as the stock went up to Rs 1010 and you sold the stock. So in this case you will get a profit of Rs 5000. Similarly day traders make a good profit in a few hours. This is called intraday trading or day trading.
How to do Intraday Trading?
To do day trading, you have to open your demat account on online trading platform (such as Zerodha, Upstock, Angel broking etc.) You cannot do any trading without a demat account. Therefore, it is necessary to have a demat account for trading in the stock market. Let me tell you that there is a lot of risk in intraday trading. That’s why you need to have some specific knowledge before doing day trading. Let’s know again.
- To do intraday trading, the shares selected by you must be liquid. This means that the stock you are buying should have high volumes. If the volume is low in any stock, then for intraday trading one should stay away from that stock.
- Select only 2-3 good stocks to do intraday trading.
- Before selecting the stock, see the trend of the market. Only then choose the shares for intraday trading.
- In intraday trading, the movement of the stock is very fast. Therefore, before taking a trade, decide in advance the entry price, target and most importantly the stop loss. Which you get out of the market at the right time.
- For intraday trading, it is considered more appropriate to choose those stocks which move along with the index or sector.
- Most important that the share market is risky, so take trades of as much money as you do not have any problem in losing.
What are the advantages of Intraday Trading?
Knowing the advantages of intraday trading is very important. Because these advantages differentiate day trading from other trading.
- Intraday trading requires less capital as compared to investment or delivery.
- Earn profit in short time in intraday trading. You don’t have to wait long.
- If there is more volatility in the stock market then you can earn more.
- You get more leverage in Day Trading. But the leverage facility varies from broker to broker.
- There is no overnight risk in Day Trading. At the same time, there is an overnight risk in holding and long term investment.
- In intraday trading, you also get the facility of short selling. This means that a stock can be sold first. After that you can buy at a lower rate.
What are the disadvantages of intraday trading?
Do you know the benefits of day trading? Seeing this, you must have been ready to do intraday trading. You must be thinking that intraday trading is very easy. But let me tell that if intraday trading has advantages, then it also has some disadvantages. The ones you need to know. So let’s get to know about its disadvantages.
- In day trading, profit is made over a period of time. On the other hand, money is also lost in some time.
- You do not get any fixed return in day trading. That is, there is no fixed salary here on which you can depend.
- Leverage, if yours proves to be helpful for multiplying profits. So on the other hand your loss also multiplies.
- It is important for you to have discipline for Intraday Trade. If you are not disciplined then you can do a lot of damage.
- You have to be psychologically strong in Intraday Trading. Which is one of the biggest challenges for intraday traders.
Intraday trading is very risky, so before doing intraday you should have knowledge about the market. Meaning that everyone here today wants to earn money. But the reason why 90% of the people are not successful is that they do not have proper knowledge about the market.
Even if some people have knowledge about the market then money management or psychologically are not strong. If you trade on emotions in intraday, then you may have to face huge losses.
In intraday trading, stocks are volatile. Therefore, do not take trades on the advice of anyone at all. Before taking a trade you must have its logic. This means that you need to develop research and understanding before taking any trade.
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