What Is Intraday Trading and How Does It Work?

What is Intraday Trading?

Intraday trading, also known as day trading, is when you buy and sell stocks within the same trading day. Imagine you have bought any stock after market opening at 09:15  and sold before market closing. All above process is intraday trading in live market within a single day.

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Important features of Intraday Trading:

1. All trades are completed within a single day in a live market.

2. Positions are not held overnight otherwise it will be considered as delivery.

3. Traders aim to profit from small price movements.

4. It requires quick decision-making and constant market monitoring with fix stop-loss and target.

"Intraday trading is like trying to catch waves in the ocean of the stock market – you need to be quick, alert, and ready to ride!"

How to work Intraday Trading?

Now that we know what intraday trading is, let's break down how it actually works. It's not as complicated as it might seem at first!

Step 1: Market Research and Analysis

Before the market opens, traders do their homework. They look at:

1. Yesterday's market trends like upside or downside or sideways.
2. News that might affect stock prices like stock results and stock news or any event day like RBI policy, you have to be aware .
3. Technical charts and patterns, you have to know.

Step 2: Choosing Stocks for intraday trading

Based on their research, traders pick stocks they think will move up or down during the day. They might look for:

1. Stocks with high volumes.
2. Shares of companies with recent news like Results or any company-related news.
3. Stocks showing clear upward or downward trends or sideways.

Step 3: Setting Up the Trade

Once they've chosen their stocks, traders decide:

1. When to enter the trade for a good profit.
2. How many shares to buy or sell as per your funds?
3.  At what price to exit for profit or to cut losses, it will pre-decide.

Step 4: Executing and Monitoring Trade

This is where the action happens! Traders:

1. Should place their buy or sell orders.
2. Keep a close eye on price movements.
3. Make quick decisions to exit trades as per target and stop-loss.

Step 5: Closing Positions

Before the market closes, traders make sure to:

1. Sell all the stocks they bought earlier.
2. Buy back any stocks they sold short-selling stocks.
3. Calculate their profits or losses for the day.

Advantages of Intraday Trading

Intraday trading can be pretty exciting and has some cool benefits:

1. Quick Profits: You don't have to wait for days or weeks to see results.
2. Lower Costs: Many brokers offer lower fees for intraday trades.
3. No Overnight Risks: You don't have to worry about what might happen to your stocks while you sleep.
4. Leverage: You can often trade with more money than you actually have in your account. Normally all broker provide till 5times margin in equity intraday trading.

Risks and Challenges:

1. High Stress: It can be pretty nerve-wracking to make quick decisions all day.
2. Potential for Big Losses: Just as you can make money quickly, you can also lose it quickly too if any wrong trade done by you.
3. Time-Consuming: It requires your full attention during live market hours.
4. Need for Discipline: It's easy to get carried away by emotions and make mistakes.

Tips for Successful Intraday Trading:

1. Start Small: Don't jump in with all your savings. Trade with a small amount first!
2. Set Clear Goals: Know how much you want to make and how much you're willing to lose.
3. Use Stop-Loss Orders: These are like safety nets that can protect you from big losses.
4. Keep Learning: The market is always changing, so keep updating your knowledge.
5. Don't Let Emotions Drive You: Try to stay calm and stick to your strategy, even when things get intense.

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