August 23, 2023
8 mins read
Intraday trading often appeals to people who enjoy a more hands-on pace in the market. Watching a position develop within a single session creates a different kind of focus, almost as if the market is having a direct conversation with you.
Because trades open and close in such a short window, mistakes do not hide for long. A sudden turn in price can disrupt your plan before you realise it, which is why many traders hold on to a few intraday trading rules that help steady their decisions.
Intraday trading does not resemble long-term investing. Here, you respond to timing rather than waiting for broader trends to unfold. You might catch yourself pausing mid-trade, rethinking a choice because the chart starts hinting at something new.
Choosing the right stocks is the foundational intraday trading rule. Counters that move with reasonable consistency let you act without feeling rushed. If the stock lacks liquidity or behaves erratically, even a well-considered idea can slip out of reach surprisingly fast.
With time, you will begin noticing how prices react to unexpected news or sudden bursts of activity. These observations build slowly. Intraday trading becomes clearer through repetition and the small reflections you make at the end of each session, not through dramatic breakthroughs.
Summary
Intraday trading rules help traders manage risk and make better decisions in fast-moving markets. This guide explains key intraday rules such as choosing the right broker, trading liquid stocks, using stop-losses, managing emotions, and avoiding overtrading. It also covers SEBI margin rules, leverage limits, profit settlement norms, and practical tips to trade with discipline, clarity, and consistency in the Indian stock market.
Your broker quietly shapes your daily workflow. A platform that feels stable and straightforward gives you space to think, rather than forcing you to troubleshoot. Over time, those small bits of convenience matter more than they seem at first.
Trends rarely reveal themselves in a single glance. Occasionally, something from the previous day suddenly fits into place when you check the charts again. These small recognitions help you develop a more natural sense of how prices shift.
Highly traded stocks allow you to move in and out without hesitation. Orders tend to fill smoothly, and the price behaves in a way that feels more manageable. This steadiness reduces the tension that can build during fast sessions.
Volatile stocks often look exciting at first, but their unpredictability can make decisions harder, not easier. By choosing steadier counters, you give yourself room to think clearly instead of reacting to every unexpected jump.
Emotions slip into trading quietly. A moment of confidence, a flash of worry, and suddenly you are adjusting decisions without realising why. Setting personal rules beforehand gives you something steady to rely on when your judgment feels unsettled.
A stop-loss works in the background, protecting you at times when you may not react quickly enough. If the market turns sharply, it limits the damage and keeps the rest of your day from being driven by a single misstep.
Planning these levels brings clarity. Even when a chart surprises you, your plan reminds you of your original intention. It keeps impulsive choices at bay and offers a structure when the session becomes hectic.
Margin feels appealing when trades go well, but the reverse can come just as quickly. Thinking honestly about the worst-case situation helps you decide whether the risk truly fits within your comfort zone.
Intraday markets can shift direction without warning, which makes it safer to use funds that are not tied to essential expenses. Trading with surplus money offers breathing room and removes unnecessary pressure from each decision.
A mix of positions adds stability. When one stock behaves unpredictably, another may move more steadily, softening the overall effect. This small balance can make a noticeable difference over days of active trading.
Taking too many trades in a row tends to blur your judgment. Eventually, you start reacting to movement rather than evaluating it. Setting a limit keeps your decisions more deliberate and your thinking clearer.
Every trade involves a bit of uncertainty, and that is just part of the territory. Some opportunities, though, feel more balanced than others. When the possible gain clearly outweighs what you stand to lose, the decision becomes steadier. You are not guessing; you are choosing a trade that sits comfortably within your own sense of risk.
A trading approach does not appear all at once. It grows slowly as you try different ideas, adjust things that do not quite work and learn from days when the market seems to challenge every assumption you had. Gradually, those small lessons gather into a strategy you can rely on, especially when the market starts moving faster than expected.
Reviewing your trades can teach you more than you expect. A win sometimes reveals a detail you did not notice in the moment, while a loss often shows where your reasoning drifted. Looking back with a calm eye helps you recognise patterns, and with time, those insights shape steadier, more thoughtful habits.
Additional Read: Advantages and Disadvantages of Intraday Trading
Understanding the basic intraday rules is crucial for success. Knowing these intraday trading rules helps traders make informed decisions, manage risks effectively, and avoid costly mistakes. By adhering to intraday rules, traders can achieve consistent performance and efficiency.
Understand Market Trends: Before trading, study market trends and use technical analysis to make informed decisions.
Set Clear Targets: Establish profit and loss targets before entering a trade to manage risks effectively.
Use Stop Losses: Implement stop-loss orders to minimise potential losses and protect your capital.
Monitor Positions: Regularly check your positions and adjust strategies as needed based on market movements.
Avoid Making Hope Trades: Stick to your strategy and sell when your setup indicates, instead of holding out for a higher price that might not materialise.
Finish Your Trades by 3:30 PM: Close all your trades by the end of the trading session to avoid overnight risks and unexpected losses.
Stay Updated: Keep abreast of financial news and market developments that can impact your trades.
Practice Discipline: Maintain discipline in following your trading plan and intraday rules to ensure consistent performance.
Intraday trading involves swift stock trading, appealing to both beginners and experienced individuals. But exercise caution – it involves risk. Beginners might find themselves facing more losses than gains.
This is why a solid understanding of fundamental rules for intraday trading is imperative. These rules act as a guide, aiding in the selection of optimal stocks for trading. Let’s embark on a journey to explore and learn about these rules together!
Starting December 1, 2020, SEBI's new rules for intraday margins initiated a reduction by 25% every three months. If the margin was initially set at 100% before December 2020, it subsequently decreased in stages as follows:
December 1, 2020 – 25% reduction
March 1, 2021 – cumulative 50% reduction
June 1, 2021 – cumulative 75% reduction
September 1, 2021 – no margin requirement
From September 2021, SEBI’s updated margin rules stipulate that stockbrokers can offer a maximum of 5X leverage to traders. Previously, leverage could reach up to 40-50 times, making this a significant regulatory shift.
In terms of margin requirements, traders must now maintain an initial margin equal to 50% of the investment value. Additionally, the maintenance margin is set at 40% of the market value. These requirements must be met before trading starts each day, aligning with SEBI’s goal to increase compliance and control over intraday trading rules.
When trading, intraday trading rules allow traders to pledge shares as collateral to obtain the necessary margin for trades. Instead of transferring ownership to the broker, the shares remain in the trader's account, but a lien is marked on them. This lien signifies that the shares are held as security, ensuring the broker has rights over them in case of a default. This system not only protects the broker but also offers a secure way for traders to use their holdings without losing control over their shares.
Furthermore, SEBI’s updated intraday trading rules require brokers to obtain a unique authorisation code from the trader before activating the lien. This additional step adds a layer of security, ensuring that shares are pledged only with the trader's explicit consent. The lien mechanism allows traders to meet margin requirements safely, making it easier to manage risks while participating in high-frequency trades. By complying with SEBI’s intraday trading rules and guidelines, brokers and traders can execute transactions with enhanced transparency and security.
Recent regulatory changes have altered how intraday profits are treated, especially concerning margin availability and fund withdrawal. Under the updated rules by SEBI, profits earned from intraday trades are not immediately available for withdrawal or reuse on the same trading day. This aims to enhance risk management and discourage excessive speculation.
Instead, the realised intraday gains are credited to the trading account only after settlement, typically on T+1 basis. This move ensures that traders operate with actual funds rather than notional profits. While it may reduce liquidity for high-frequency traders, it brings more discipline and transparency into retail trading behaviour.
Start with a plan: Always enter a trade with a clear profit target and stop-loss level. Avoid emotional decision-making.
Follow the market trend: Trade in the direction of the overall market movement. Trend-following strategies usually offer better consistency.
Use stop-loss orders: Protect your capital by placing stop-losses. This limits potential losses and improves risk control.
Limit leverage usage: Avoid excessive leverage, especially during volatile sessions. Over-leveraging can lead to large losses even from small price movements.
Time your entries and exits: The first and last hours of market sessions are often the most volatile. Trade during these windows only if you're confident and experienced.
Don’t overtrade: Avoid making too many trades in a single day. Focus on quality over quantity.
Stay updated: Keep an eye on news events and market announcements that may affect stock movements on that day.
Keep emotions in check: Fear and greed can cloud judgment. Maintain discipline even if a trade goes against you.
Practice with a demo account: If you're new to intraday trading, use a virtual trading platform to build skills before using real capital.
Mastering intraday trading takes time, practice, and continuous learning. By following these tips, traders can improve their decision-making and better manage risk in fast-moving markets.
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There is no minimum amount required to start intraday trading, but it's advisable to begin with a modest amount to manage risk effectively.
Intraday trading risks include market volatility, rapid price fluctuations, potential losses, and the psychological pressure of quick decision-making. Proper risk management and adherence to intraday trading rules are essential.
There is no strict limit on the number of shares you can buy in intraday trading.
Optimal trading times are generally from 9:30 AM to 11 AM and 1 PM to 2:30 PM, though this can vary based on market conditions and individual strategies.
The golden rules for intraday trading include following specific intraday trading rules and maintaining discipline. Set clear profit and loss targets to manage risks effectively and use stop-loss orders to protect your capital. Lastly, continuously monitor the market and stay updated on market movements to make informed trading decisions.
To minimize losses in intraday trading, follow strict intraday trading rules such as using stop-loss orders, trading liquid stocks, and avoiding impulsive decisions. Consistently applying these strategies helps manage risk and enhance profit potential.
SEBI has implemented specific intraday trading rules to safeguard traders, including margin requirements and leverage limits. Following SEBI’s guidelines ensures that traders comply with these standards, reducing financial risk in high-volatility environments.
Beginner traders face restrictions such as reduced leverage and stricter intraday trading rules from brokers to protect them from excessive risk. Adhering to these rules helps new traders gain experience without significant financial exposure.
Violating intraday trading rules can result in penalties, including fines or restrictions on trading activities. SEBI enforces these penalties to promote responsible trading practices and maintain market stability. Consistently adhering to intraday trading rules helps traders avoid such repercussions and operate within legal guidelines.
Intraday trading rules require positions to be closed within the same day, whereas delivery trading allows holding stocks overnight. These rules differ mainly in risk exposure, with intraday trading demanding more immediate decisions.
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