Intraday Trade as the name suggests it’s the trading done within the same day. The trade starts and closes within a span of one day or one trading session. Traders who enter and exit trading on the same day are Intraday Traders.
These traders sell and buy shares or other financial instruments on the same day or before the closing of the market. This trading is done in stocks, commodities, currencies, etc. The intention of intraday trading is to make profits by making trades in a very short interval of time.
Equity Intraday Trade
Equity Intraday trading is buying and selling equities or stocks in the trading of a day. For example, if a trader buys a share of Rs.130 in the opening hours of the market and exists the market at Rs.140. Then the profit earned on that stock would be Rs. 10.
It is advisable that in order to earn profits in Equity Intraday Trading, the trader should follow the market trends during the day. If the signs in the market are positive then the person should buy when the prices are low and wait and sell at a higher price. If the trends are negative then the trader should sell at higher prices and then buy at lower prices to make good profits.
Proprietary Day Trade
In Proprietary Day Trading a financial company or a bank trades by using their own money or the money earned in commissions. These trades happen on a contract basis in shares, commodities currencies, etc, to make more profit for the firm. In the trade too, the buy and selling happen the same day.
How to do Intraday Trading?
Intraday trading as it sounds easy is as difficult. There is a lot of research, knowledge, and experience involved in doing intraday trading. These are the general rules that are followed while doing intraday trading.
- An intraday trader must determine that at what price they want to enter the market and leave the market.
- The trader should also decide on a stop loss and stick to it strictly throughout the trading period.
- Along with deciding losses one must also decide on profits, and do not become prey to the greed of unrealistic high profits.
Intraday Trade Advantages
- All the trades that take place, happen on the same day itself. So the danger of blocking the capital is not there The trader neither book high profit nor takes losses at the stop loss.
- The traders experience both bullish and bearish sentiments. The traders can take both short and long positions depending upon the trend of the market.
- Traders are saved from the huge rise and fall of the market as they do not have any open positions at the end of the day.
Intraday Trade Disadvantages
- The buying and selling of stocks happen on the same day itself. There is a possibility that the trader might come to a position of high risk in comparison to investing in stocks.
- Intraday trading involves a lot of attention of the trader. It is almost a full-time job and requires a lot of research and reading even before and after the opening and closing of the market.