What is Intraday or Day Trading?

By Vishweshwar HS,   www.showmytrade.com

In olden day Intraday or Day Trading is done by professionals from prominent financial institutions, brokerage houses, trading firms who are actively involved in the day trading activities. Stockbrokers provide extensive online trading platforms. One can trade on trading terminals, Mobil app-based trading, and web-based trading. It is easy; anybody can learn and trade themself.

Day trading can provide excellent earning opportunities, provided one learns all aspects of day trading – knowledge, professional training, trading strategy, risk-to-reward, the wise use of leverage, and, more importantly, discipline trading. Wrong use of day trading methods can lose the investing capital.

Basics of Day Trading

Day trading is defined as the purchase and sale of liquid securities within a single trading day. The trade timing in India, is between 9:15 AM to 3:30 PM.

In day trading, either buying first or selling later (long) or selling first and buying then (short) irrespective of profit or loss. Small jumps in the stock price can give quick profits, but any adverse movement will lead to a significant loss.

Example of Day Trading

 Mr. Ajay, a trader, bought 100 shares at 226.20 per share of ICICI bank on Monday morning when the market opened at 9:15 AM. During the day as the prices were fluctuating, Mr. Ajay was able to sell these 100 shares at Rs 229.70 per share at 11:45 AM. So he made a gain of Rs 3.50/- per share, and the total profit excluding brokerage was Rs 350/-. In this example, Ajay bought and sold shares on the same day. 

In another case, Mr. Ajay, short (sell first), 100 shares @ 300 per share of ITC (though he did not have the share) during the trading day, and bought back at Rs 296. He made a profit of Rs 4 per share and made a profit of Rs 400.

Thus, in day trade, you can take both long (stock going up) or short (stock going down) — uni-directional position. 

Another advantage of day trading is you can take leverage exposure. Let’s say you have Rs 10,000 in your trading account; you can buy five times or ten times of your money, i.e. (Rs 50,000 to 1,00,000). Your broker can give 5X or 10X exposure with a 0% extra charge.

Merits of Intraday trading

  • No overnight risk in day trading.
  • A small jump in stock price leads to quick profit (as the stockbroker allows leverage or exposure).
  • Commission & brokerage are relatively less.

De-Merits of Intraday trading

  • Constant monitoring of ‘securities traded’ is required.
  • Small adverse movements can result in a significant loss.
  • The high volatility of the market creates uneasiness for a typical trader.

Day trader’s focus on events affects the stocks (volatility). Event/Announcement, like company results, budget, RBI Rate policy, etc.

Day traders use strategies that are news-based stocks — scalp trading, pivot, range trading, etc. using the technical analysis tool. 

A professional day trader has excellent knowledge and experience of the stock market, sufficient capital, trader’s mindset, trading strategy, and, more importantly, trade discipline.

The Bottom Line

Day traders are active traders who have a definitive trading plan to exploit the profit opportunities with calculated risk. Day trading is for well educated in the stock market. Day trader employs a wide variety of techniques and strategies to capitalize on perceived market inefficiencies. 

The day trading requires –

  • trade objectivity.
  • technical analysis skills and
  • self-discipline

Learn the day trading skills from the professional stock market trainer, practice the ability, and continuous improvement for the thriving independent trader. The objectivity of the day trader is “minimum and consistent” earning. Day trading helps to earn extra income along with a job or profession. One should be ready to learn and make money in the long run!

Kindly share your comments on the day trade below. Any information regarding the day trading adds in the next update.

Thanks for reading! Good Earning!


Write a comment



Get Free Updates