Intraday trading refers to the practice of buying and selling stocks within the same day. Many traders believe that intraday trading is the best way to make money in the stock market. However, it is important to note that there are risks involved. This blog post will help you understand What is Intraday Trading and How to start intraday trading?

In Trading, The purpose is simple, they don’t want to invest money for the long term. They trade for quick gains by controlling the stock movement. Hence, the changes in the stock prices are tracked closely to earn profits and losses from the day trading.

This Post will also introduce some of the main tools and concepts of day Trading. So Let’s begin with What is Intraday Trading?

What is Intraday Trading?

If You buy or sell the shares of any listed company on the same day, then This Process is called Day Trading or Intraday Trading. Day Trader looking for stocks that are moving in a relatively predictable manner and they are going to trade them in One Day. Day Trader will not keep any position overnight.

Suppose You Buy stocks in TCS today, for instance. You will not hold your position overnight. You had to square off your positions before 3:15 PM even If You are at a Loss.

You should be some understanding of the overall Market Situation, It is Bullish, Bearish, or Sideways. You as a Day Trader will not necessarily need to know about the market direction in the FutureYou are Day Trader, Your time span is measured in seconds and minutes, rarely in hours, and certainly not in days Weeks, or Months.

How Intraday Trading Works?

#1 Buying Long, Selling Short.

Long:- Day Traders buy stocks in the hope that their price will go up. This is called buying Long or simply Long. If You buy 100 shares of Reliance You can say that “ I am long 100 Shares of Reliance” Going long is good when the price is expected to go higher but in that case, the Price is dropped. You will lose because your expectation to go higher but it goes Down.

Short:- If Prices are Dropping, In that case, You can Sell Short and still make a profit. Day Traders can borrow shares from their Brokers and sell them, hoping that the price will go down and that they can then Buy these Shares back at lower-Price and the difference between Buying and Selling Price is your Profit. This is called Selling Short or simply Short. Suppose you Sell 100 Shares of Reliance You can say that “ I am short  100 shares of Reliance”. You can buy them cheaper than when you sold them earlier and make a Profit.

Short Selling is important because stock Prices drop much quicker than they go up because Fear is a more Powerful Emotion than Greed.

#2 Retail Traders vs Institutional Traders

Retail Traders like you and I, are called Retail Traders. We can be part-time or full-time Traders. We are working as an individual not working for a firm and We are not managing other people’s money. Retail Traders are a very small percentage of the Volume in the Stock Market.

On the other hand, There are so-called Institutional Traders such as Mutual Fund, Hedge Fund, Investment Banks, and Proprietary Trading firms.  Institutional Firms are most of their Trading is based on Algorithm Trading.

 

#3 High-Frequency Trading (HFT)

Most Mutual Fund, Hedge Fund, Investment Banks, and Proprietary Trading firms base their trading on sophisticated Computer Algorithms and High-Frequency Trading (HFT).

In HFT some of these programmers designed algorithms to predict the Market based on Past Market Data.

 

#4News  Impact on Stock Price.

Stocks have unexpected Fresh News, either Positive or Negative. Here is some example…..

  • Earning Report.
  • Earning Warning or Pre- Announcements.
  • FDA Approvals or Disapprovals (for Pharma Stocks).
  • Merger or Acquisitions.
  • Alliances and  Partnership.
  • Product or Service Release.
  • Major Contract Wins or Losses.
  • Management Changes.
  • Stock Split and Buyback.
  • Debt Offering.

 

Frequently Asked Questions (FAQs)

1. What is intraday trading?

Intraday trading is a type of trading where you buy and sell stocks within the same day. This means that you will not hold any positions overnight, and all your trades will be closed by the end of the day.

2. Why intraday trading?

–  There are many benefits to intraday trading, including:

– Potentially higher profits – since you’re not holding any positions overnight, you can take advantage of more opportunities during the day.

– Lower risk – since you’re not holding any positions overnight, you’re not exposed to as much risk.

– More control – you have more control over your positions since you’re managing them throughout the day.

3. How to start intraday trading?

– If you’re interested in starting intraday trading, there are a few things you need to know:

– Find a broker that offers intraday trading. Not all brokers offer this type of trading, so make sure to do your research beforehand.

– Familiarize yourself with the basics of stock trading. You don’t need to be an expert, but it helps to know the basics before getting started.

– Develop a strategy. There are many different strategies you can use for intraday trading, so it’s important to find one that fits your goals and risk tolerance.

4. Why is Intraday Trading Risky?

One of the main reasons why intraday trading is risky is because you are buying and selling stocks within a very short period of time. This means that you could end up making a loss if the stock prices move against you. Another reason why intraday trading is risky is that you are relying on your own analysis. This means that you could make wrong decisions which could lead to losses.

If You have any doubt regarding What is Intraday Trading, You can comment below this post. We are happy to help You.
Happy Learning…