September 29, 2022
8 mins read
Intraday trading has drawn more attention over the past few years as people search for quicker ways to take part in the stock market. The idea is simple: buy and sell shares within the same day.
For someone new, the subject can feel heavy at first. Articles, videos, and opinions are everywhere, each suggesting a different way to begin. Knowing which advice to trust often becomes the first challenge.
This short guide clears the noise. It focuses on what really matters — understanding how intraday trades work, what to prepare before starting, and how to handle the day’s quick market moves sensibly.
Intraday trading involves purchasing and selling stocks within a single trading session to benefit from short-term price changes. This content explains the basics of how intraday trading works, including leverage and short selling, along with guidance on choosing stocks, timing trades, using strategies, and managing risk. It also outlines beginner-friendly alternatives such as swing trading, position trading, ETFs, and mutual funds.
Regular trading and intraday trading are different in several aspects. While intraday trading refers to the buying and selling shares on the same day, regular trading does not have such time constraints. You can sell shares whenever convenient. When you buy shares in intraday trading, you do not get the ownership of these shares. In regular trading, also known as delivery trading, these shares are delivered to your Demat account , and you have complete ownership of these shares.
Intraday trading provides a unique opportunity to short sell. It means taking a position that the stock prices will fall. It gives intraday traders an edge during falling markets. It can help intraday traders make profits even when the markets are falling. Regular traders do not get the benefit of this feature.
Leverage is another key factor associated with Intraday trading. Intraday traders get the option of leverage that allows them to take higher positions than their available capital. The additional amount is financed by their stockbrokers and gives them neutral risk-based returns on an intraday trade. Usually, regular trading does not involve leverage. However, with brokers like Bajaj Broking, who offer Margin Trade Financing on regular trading, you get the option to avail up to 4x leverage on MTF trades.
Intraday trading requires effort, time, and good analytical skills. If you are willing to spend hours analysing stocks, understanding their price patterns, and are willing to take the risk of leverage, then intraday trading is for you. Intraday traders practice something known as technical analysis that allows them to generate buying and selling signals depending on different market situations. To participate in intraday trades, you need to be swift with your timings and sharp with your execution. Timing is everything in intraday trading. A trader must time their trades as perfectly as possible to make the most of an opportunity.
Managing risk is another aspect of intraday trading. Intraday traders deal with leverage that can be a two-edged sword. In extremely volatile markets, intraday traders need to be calm and focused on their analysis rather than getting intimidated by the price changes.
Intraday trades can be placed on the online platform of your broker. Intraday orders are separate from other order types, and you need to place them accordingly. To place an intraday trade, you need a Demat and Trading A/c with a trusted broker. As intraday trading involves brokerage it is important to choose the right broker who will help you save brokerage on your daily trades.
For intraday trading, traders like to choose stocks that have enough liquidity. Liquidity allows an intraday trader to swiftly execute an order without affecting the market price of the asset. With intraday trading you are aware that the order needs to be squared off at the end of the market hours and if the stocks are not liquid enough then you may not find a seller, this can be an undesired result for you as an intraday trader, thus it is very important to trade on stocks that have high liquidity.
Intraday trading is a trading strategy where stocks are bought and sold within the same trading session to take advantage of short-term price fluctuations. It focuses on market trends, technical indicators, and timely entry and exit points. Successful intraday trading requires strong risk management, the use of stop-loss orders, and disciplined decision-making to control losses while aiming for steady returns.
Anyone can participate in intraday trading with a trading account. It has many unique benefits and advantages.
The return-on-investment opportunity for intraday traders is high because of leverage and this gets people excited about intraday trading.
An intraday trader gets an opportunity to avail the best of leverage. This allows them to take larger positions than their available capital and in turn improves their chances of making better returns.
Intraday trading allows a trader to not only benefit from rising stock prices but also from falling stock prices through an option that’s known as short selling.
There’s a short to medium range for strategies to work out.
First and foremost, to begin intraday trading, you need to have a Demat and Trading A/C.
Choosing suitable stocks is the heart of intraday trading. Since positions open and close in a single day, traders usually look for shares that move actively but remain fairly stable through the session.
Every trader faces unexpected turns. Setting a stop-loss level means the trade ends automatically if prices fall too far. It’s a practical habit that keeps losses small and emotions under control.
Before stepping in, spend time watching how the market behaves. Follow business updates and economic news that could influence prices. Over time, these small observations help you make calmer and better-timed decisions.
As a beginner, before you start intraday trading, you need to be well-versed with a few strategies. Here’s an overview of some of the simplest and the most common strategies designed for intraday trading for beginners.
Trend-Following Strategy: This is one of the easiest strategies in the intraday trading guide for beginners. As the name implies, the trend-following strategy involves taking positions in an asset matching that of the current trend. For instance, if a company’s stock is going through a bullish trend, you need to take a long position in that particular stock. Once your target level is achieved, you can square off your position immediately.
Breakout or Breakdown Strategy: A breakout is when the price of an asset rises past its resistance level. On the other hand, a breakdown is when the price of an asset falls below its support level. You can use the support and resistance information of an asset to plan your intraday trades. For instance, if an asset breaks out of its resistance level, you can consider taking a long position. Alternatively, if the asset breaks down out of its support level, you can consider shorting it instead.
Reversal Strategy: A reversal is when the price of an asset that’s trending in a particular direction suddenly switches and moves in the opposite direction. For instance, if an asset that’s been rising suddenly starts falling, it is said to have reversed trends. The reversal strategy involves initiating a position in an asset at the point of reversal. Doing so will allow you to take maximum advantage of the ensuing price movements. This particular strategy forms a major part of the basics of intraday trading for beginners.
Now, no matter what kind of strategy you use for intraday trading, it is always advisable to have a proper risk management plan. This will ensure that the losses, if any, are limited. Also, remember to use technical indicators to confirm your hypotheses before executing any intraday trading strategies.
Swing Trading: A popular alternative for trading for beginners, swing trading involves holding stocks for a few days or weeks. This allows traders to take advantage of medium-term trends without the intense monitoring required in day trading.
Position Trading: Position trading, unlike day trading, is a long-term growth strategy ideal for beginners, helping them build foundational skills without the pressure of daily market fluctuations. For those interested in how to do trading for beginners, position trading provides a gentler introduction to the trading environment.
Robo-Advisors: A tech-driven option,robo-advisors are said to help identify potential trades by analysing data and trends. This method is increasingly popular among trading for beginners due to its ease of use.
ETF and Mutual Fund Investments: For beginners who want a more passive approach, investing in ETFs or mutual funds are alternate choices they can explore. This allows for market exposure without the high risks associated with day trading.
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Intraday trading involves buying and selling stocks within the same trading day to benefit from price fluctuations. This style of trading requires close monitoring of market trends and swift decision-making to maximize profits while minimizing losses.
For beginners, start by selecting a reliable trading platform, learning basic strategies, and practicing with small trades. Understanding terms like stop-loss and target prices is essential to manage risk effectively and minimize potential losses in the early stages.
Beginners should learn to interpret stock charts and indicators like Moving Averages and RSI. These tools help predict price movements, making trading for beginners more structured and less risky when entering and exiting trades.
Selecting highly liquid stocks with a history of price movement is crucial in intraday trading. Beginners can start by choosing well-known stocks and analyzing trends to find reliable patterns, reducing uncertainty.
A quality trading platform with real-time data and charting tools is vital. Beginners should explore platforms that offer low fees, fast order execution, and demo accounts to practice trading for beginners safely.
Start with a modest capital amount, around ₹5,000–₹10,000, to learn without risking too much. This allows beginners to gain hands-on experience in intraday trading while learning to manage their funds effectively.
Stop-loss prevents excessive losses by selling a stock once it reaches a set price. Target prices are the predetermined profit points where traders exit. Both tools help beginners manage risks better and maintain control over trades.
Use stop-loss orders, set realistic targets, and avoid over-trading. Beginners should keep their trades small and monitor the market closely, practicing with a structured risk management plan to avoid heavy losses.
Impulsiveness, lack of strategy, and neglecting stop-loss orders are common mistakes. Trading for beginners should focus on consistent learning, sticking to a plan, and avoiding emotional decisions to ensure a steadier start.
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