What is Intraday Trading? | Basics of Intraday Trading

Intraday trading or simply intraday is the most practiced trade form in the stock market. As the name suggests, intraday trade requires you to buy and sell a stock within the same trading day. For example, if an investor buys the stock of ABC company in the morning on intraday basis, he needs to sell it off before the market closes for the day.

If the investor fails to square off his open position by 3:00 PM, the same is automatically squared off by the broker through a market order. A market order buys or sells securities at the current market price.

Intraday trading is targeted at making the most out of small market movements. At the time of placing the order, the investor needs to specify that the order is intraday or holding. AN intraday order can be converted into a holding order later before 3:00 PM. The main advantage of intraday is it allows investors to place a large number of trades with a limited capital.

Almost every broker provides a limit to the investors for intraday which can be in multiples of their capital. An investor can place intraday orders using this limit and only pay the net profit and loss at the end of the trading day. Thus, intraday allows the investors to trade in the market with limited capital. However, if a trader converts his intraday order into holding, he needs to pay the entire amount upfront to the broker.

Since intraday requires you to buy and sell shares withing the same trading day, it is also amongst the riskiest trade practices. Intraday trading is recommended for full-time traders who have proper knowledge and experience of trading in the markets. If you are new to the markets, you can take the services of an investment advisor who can help you in intraday trading by providing research-based recommendations.

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