Intraday trading
Intraday trading means buying and selling the same share within a single trading day, so that no position is carried overnight. The aim is to gain from small price moves during the day. Losses can come just as quickly as gains.
How intraday trading works
An intraday trader opens a position and closes it before the trading day ends. If the trader does not close it, the broker usually closes it automatically near the end of the day. Because nothing is held overnight, the trader is not exposed to news that arrives after the market has closed.
The profit or loss is the difference between the buy price and the sell price, multiplied by the quantity, minus charges.
Leverage and charges
Brokers often allow intraday positions that are larger than the cash in the account, using margin. That makes both gains and losses bigger relative to your own money. Brokerage, taxes and other charges are paid on every trade, so a trader who trades often has to earn enough just to cover them.
The tools used
Intraday traders watch price charts over minutes, volume, and averages such as VWAP, and they usually set a stop-loss so that a trade that goes the wrong way is closed at a limit chosen in advance.
A calm note on risk
Studies of individual traders by SEBI have found that most lose money over time. Intraday trading demands fast decisions, which is exactly when emotions do the most damage. Maetis teaches how to think about risk; it does not tell anyone to trade.
One intraday trade (hypothetical numbers)
Suppose a trader buys 100 shares at ₹500 in the morning and sells them at ₹505 in the afternoon. The gross gain is 100 x ₹5 = ₹500. After brokerage and taxes, which are paid on both the buy and the sell, the amount kept is lower. Had the price instead fallen to ₹495, the same arithmetic would have produced a ₹500 loss before charges.
Common questions
- What does intraday mean?
- Within one day. An intraday trade is opened and closed on the same trading day.
- What happens if I do not sell an intraday position?
- Your broker will usually close it automatically near the end of the day, at whatever the price is then.
- What is the difference between intraday and delivery trading?
- In delivery, you buy shares and hold them in your demat account beyond the day. In intraday, you square off the same day and the shares never settle into your account.
- Is intraday trading risky?
- Yes. Fast moves, leverage and charges mean losses can be large and quick, which is why a stop-loss and a fixed risk per trade are commonly used.