Intraday roughly means ‘within a day’ while intraday trading means purchasing and selling shares on the same day. In intraday trading, the traders have to close their position before the market hours end. It is a short-term-based investment approach that requires traders to constantly evaluate the prices of the share. Technical analysis is used by intraday traders to select the entry and exit points and is most suitable for high-risk traders. Before we proceed on to the benefits of intraday trading, it is crucial to ask the question, “what is Intraday trading?”.
A brief introduction to intraday trading
The buying and selling of stocks that occur on the same day refers to intraday trading and is done through online trading platforms. For example, whenever a person buys a stock for a company there must be a specific mention of ‘intraday’ in the platform’s portal that is being used. This allows the user to buy and sell the same number of stocks, on the same day, of the same company, before the market seizes for the day.
If and when you are a long-term investor in the stock market you are eligible to earn great returns. But it can also help you with profits on a short-term basis. In such a case, you take an upper position in the stock and close it within the trading hours specified for the same day.
If you do not close the position, it automatically gets squared-off at the closing price of the market. Also, Traders are not the owners of the stock but have to look out for the best share for Intraday since the aim of intraday trading is to not be the owner rather make significant profits from the specific price movements in a given day.
Benefits of Intraday trading
After learning the basics of trading let us now see the benefits of it.
- Reduces overnight risks
Intraday trading does not have overnight risk since the market position is closed on the same day and intraday traders are not affected by negative market closure.
- Absence of capital blocking
Profits and losses in intraday trading are adjusted according to market closing since settlements are made at the end of each day, also unblocking remains on investment capital.
- Huge leverage
Intraday trading provides high leverages to brokers since the traders depend on the smallest movements in market price. Also, profits increase when there is high leverage in trading.
- Higher returns
When correct strategies are used to determine the best share for Intraday, it can generate higher profits within the short term period, in comparison to long-term investors.
Day trading or intraday trading requires practice to achieve perfection. Since intraday helps to generate high returns, traders must maintain stringent stop-loss during the trading process. To become a successful intraday trader you must learn to overcome both greed and fear, which runs very high in trading. Now, after knowing the answer to “what is intraday trading?”, you can go forward and try your shot at it.