What is Intraday Trading?


Intraday trading refers to a type of trade wherein you open a buy or sell position and exit the position on the same day. In an intraday trade, the positions of the individuals will be auto-squared off if they fail to exit their position by the end of the day.

To know more about square-off, you can follow our article on what is square off


Positions You Can Take In An Intraday Trade

Here are ways in which you can take a position in an intraday trade

Through a Long Position

Taking a long position refers to individuals buying the shares. An individual will take a long position with a bullish sentiment about the market. Individuals will own the shares when they take a long position in the market.

Through a Short Position

Taking a short position refers to individuals selling the shares. Short positions are taken with a bearish sentiment about the market. An individual will owe the shares to someone while taking a short position in the market

Advantages Of

Intraday Trading

Here are the advantages of Intraday trading:

1. Requires Low Capital

Intraday trading provides a margin facility to the traders. This means that individuals can place larger trades while only paying a small amount of capital.

2. Gives Higher Returns

Intraday trading provides the individual to earn more profits with less capital because of the margin facility.

3. Eliminates The Chances Of 

As intraday trading occurs within the day, it eliminates the chances of overnight risk that may arise from global or local news that may impact your profitability.

4. Can Benefit From Bullish And Bearish Market

As intraday provides individuals to take both long and short positions, they can take advantage of both upward and downward moments in the market.

Disadvantages Of Intraday Trading

Here are the disadvantages of Intraday trading:

1. Small Trade Intervals

Intraday trading provides the individuals only a small time window for their trades to go right as intraday trading is done within the day.

2. Risk Of Loss

As intraday trading is done using a margin facility, the individuals can incur more losses if the trades do not go in their favour

Options Trading Vs Intraday Trading

Options Trading Intraday Trading
Individuals can enter an options trade in 4 different positions Individuals can enter an intraday trade in 2 different positions
Has a monthly and a weekly expiry depending on the contract Must be squared off within the end of the day
Market factors and Options Greeks influence the price of the contract Intraday trading only relies on the market factors
Margins required by the option buyer are limited to the premium price paid margins needed by the option seller are the amount required to cover the losses Individuals get leverage on the margins available to them, They can buy or sell more shares with less capital.

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