What is the intraday trading meaning?
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Intraday trading refers to buying and selling financial instruments within the same trading day to profit from short-term price movements.
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Intraday trading refers to buying and selling stocks within the same trading day, meaning all positions are squared off before the market closes. Unlike regular investing, where shares are held long-term, intraday trading focuses on quick price movements to generate short-term profits. It requires close market monitoring, technical analysis, and timely decision-making to capitalise on fluctuations in stock prices.
An intraday trader should be aware of the price trends and monitor market behavior closely. If a trader is not keeping a close watch on market movements, he/she may incur a loss. Therefore, tracking the market consistently becomes a priority for a day trader to make a profit. There are many techniques and strategies which are followed by the day traders, one of the popular techniques is to follow the news and trade. Apart from this, a trader keeps track of the economic stats, past market trends and volatility of the shares in which they want to trade.
Intraday trading in India involves buying and selling stocks within the same trading day to capitalize on price movements. Here are the steps to get started:
Open a Trading Account:
Ensure you have a reliable trading account with a trusted broker. Platforms like Bajaj Broking provide user-friendly interfaces and low brokerage charges.Learn the Basics:
Understand the key concepts of intraday trading, including margin, leverage, and square-off policies. Familiarize yourself with terms like long position and short position.Use Technical Indicators:
Utilize tools like Moving Average, Bollinger Bands, RSI, and MACD to analyse stock price movements. These indicators help in predicting trends and making informed decisions.Develop a Strategy:
Create a trading strategy based on your risk tolerance, market analysis, and goals. Stick to your plan and avoid impulsive decisions.Monitor the Market:
Keep an eye on market news, economic data, and stock performance. Use real-time data to make timely trades.Manage Risk:
Use stop-loss orders to limit potential losses. Never invest more than you can afford to lose.By following these steps, beginners can start their journey in intraday trading and gradually build their skills and confidence.
Intraday trading refers to the practice of buying and selling financial instruments within the same trading day. The primary goal is to profit from short-term price fluctuations. Here's a detailed look at its meaning:
Understanding the intricacies of intraday trading can help traders develop effective strategies and achieve consistent results.
Intraday trading can be classified into several types based on strategies and trading styles:
Each type of intraday trading requires a different approach and skill set. Traders should choose a style that aligns with their risk tolerance and market understanding.
Day trading refers to the buying and selling of stocks within the same day. It is done with the help of online trading platforms. If a person purchases stocks for a company, then they have to select 'intraday' in the trading platform. Intraday trading is quite popular in the stock market, and one must be well-versed in the basics of intraday trading before taking a plunge. The most important thing you need to understand as an intraday trading beginner is that it involves having a view of the trend and taking a position accordingly. Having a view on the trend means you form a view of whether the stock prices will go up or down within a certain time frame. When you have a view that the prices will go up, then you take a long position, meaning you place a buy order. When you have a view that the prices will go down, then you take a short position, meaning you place a sell order. It is mandated by SEBI to square-off, that is, settle your position by the end of the market hours, or else it will be automatically done by your broker.
Example to understand Intraday:
A share's price is ₹10, and you took a long position with a buy order of 1000 shares, which is a total order size of ₹10,000. At 3:00 P.M., the share's price is trending at ₹11. You would like to settle your trade for a profit of ₹1000 for the day.
The price fluctuations in the stock market appear to be erratic and incomprehensible. But several statistical tools are used by traders to find patterns in these price movements and draw insights into future trends. A few Intraday Trading indicators are described below:
Moving Average:
Moving Average is one such technical analysis tool that traders use to predict price trends. It smooths the price fluctuation graph by creating data of average price over a specific interval. Traders can set this interval to 1 day, 10 days, 1 hour, 5 min, 1 min, etc., whatever the trader wishes. It is beneficial for both long-term investors and short-term traders. It smooths out the short-term fluctuations and gives a broader view of the ongoing trend within the time interval.Bollinger Bands:
Bollinger Band is a more advanced technical analysis tool that helps the trader identify if the shares are overbought or oversold. It consists of 3 lines. The first line is the 20-day simple moving average line, and there are two lines at two standard deviations in the positive and negative direction from it. In more volatile markets, the bands tend to widen, and in non-volatile markets, they tend to contract.Relative Strength Index (RSI):
RSI is a technical analysis tool that considers the prevailing price changes to identify if the stock is trading in the overbought or oversold state. Its value oscillates between 0 to 100. Traditionally, an RSI value above 80 suggests an overbought condition; an RSI value below 20 suggests an oversold condition. There's a rise in the index when the price of the stock rises and vice-versa.
Let's take a look at the formula for RSI calculation:
RSI = 100 – [100 / ( 1 + (Average of Upward Price Change / Average of Downward Price Change ))]
Moving Average Convergence Divergence (MACD):
MACD, a trading indicator, is used to identify signals for trend reversal or continuation in stocks' price movement. It is arrived at by finding the difference between the fast-moving average and the slow-moving average. MACD is depicted with a histogram which signals whether the momentum (of bullish or bearish trend) is high or low.Bajaj Broking offers you the benefit of low brokerage rates for intraday trading. Through affordable subscription plans, you can trade at a flat fee and save a lot on brokerage. With Bajaj Broking, brokerages go as low as ₹10 per order flat for all segments of trading: Intraday, Futures and Options, and Delivery.
Brokerage Charges for Day Trading for the 2 Subscription Packs Offered by Bajaj Broking:
Subscription packs from Bajaj Broking | Equity Intraday trading brokerage |
---|---|
Freedom Pack | ₹ 20 / order |
Professional Pack | ₹ 10 / order |
Disclaimer: Investment in securities market are subject to market risk, read all related documents carefully before investing. Brokerage will not exceed the SEBI prescribed limit. All leveraged intraday positions will be squared off the same day. There is no restriction on the withdrawal of unutilized margin amount. |
Advantages of Intraday Trading:
Disadvantages of Intraday Trading:
Volume and liquidity are the most important aspects of intraday trading according to investors. Intraday traders choose stocks with high liquidity and high trading volume. It is important to do your due diligence (research, check the news, use technical indicators) along with analysing the volume and liquidity for that stock before choosing a stock for intraday. It is always recommended by traders to analyse stocks through various technical indicators to get a better understanding of the price movements of the stocks.
Bajaj Broking is an ideal place for intraday traders, as traders have a great opportunity to save a lot on brokerages. Intraday trading experience is elevated for a trader with Bajaj Broking's simple and effective user interface.
Download the intraday trading app to start trading!
Intraday trading is a dynamic and potentially profitable trading style, but it requires a thorough understanding of market behaviour, technical analysis, and effective risk management. By following the right strategies and using reliable tools, traders can maximize their chances of success in intraday trading. Always stay informed, disciplined, and prepared to adapt to market changes to achieve consistent results.
Additional Read: Risk Management in Intraday Trading
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Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.
This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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Intraday trading refers to buying and selling financial instruments within the same trading day to profit from short-term price movements.
If a trader buys 1000 shares of a stock at ₹10 each in the morning and sells them at ₹11 each before the market closes, they make a profit of ₹1000 in intraday trading.
Bollinger Bands, Relative Strength Index (RSI), Exponential Moving Average (EMA), Moving Average Convergence Divergence (MACD), and Volume are some of the best indicators for intraday trading. These tools assist traders in spotting market trends, assessing momentum, and evaluating volatility, helping them make informed trading decisions.
Intraday trading indicators analyse price data to identify trends, reversals, and potential trading opportunities within the same day.
The best time frame for intraday trading varies; common choices include 1-minute, 5-minute, and 15-minute charts, depending on the trader's strategy.
Key technical indicators for intraday trading include Moving Average, Bollinger Bands, RSI, and MACD.
Regular trading can involve holding positions for days, months, or years, while intraday trading requires closing positions within the same trading day.
Beginners can earn by starting with small trades, using technical indicators, developing a trading strategy, and managing risks effectively.
The best charts for intraday trading are typically 1-minute, 5-minute, and 15-minute charts, which provide detailed insights into price movements.
To earn ₹1000 a day from intraday trading, focus on stocks with significant price movements, use leverage wisely, and employ effective trading strategies.
Requirements include a trading account, sufficient capital, a good understanding of the market, and familiarity with technical analysis tools.
Intraday trading can be profitable, but it also involves high risk. Success depends on market knowledge, discipline, and effective risk management.
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