How Intraday Trading Works? Detailed ideas

Personal Finance

Multiple online trading platforms make value creation as easy as a click. Are you also looking to dive into the trading world? In that case, intraday trading may be your alternate income creation path. Read on to learn more:

The process of intraday trading

The idea behind intraday trading is to leverage the short-term rise and minimize the fall in the price of the stocks. Each day, the volatility of the market differs. It means that the stock price can either rise or fall, fluctuating in both directions. For investors, the strategy is to capitalize on market movement and make small profits while buying and selling the order.

Intraday traders are usually comfortable buying and selling stocks on the same day. There is no fixed guidebook on which stocks are the best to buy. However, stocks with high liquidity are the best players in this kind of trading. These stocks fluctuate significantly during the day due to external circumstances (company valuation, leadership decisions, reputation, new investors, etc.).

The basic rule is to buy your orders at a low price and sell them at a high price. On the other hand, you can first sell your orders at a high price and then buy them back at a low price. The core principle of trading remains the same. While you place an intraday trade, you can opt for an MIS (margin intraday square-off) trade, which means the trade can square off on the same day. On the other hand, you can go for a CNC trade (cash and carry), wherein you would need to put up the whole purchase value upfront. In an MIS order, you get the benefit of lower brokerage along with a higher margin. You can even make 4-5 times the money in some cases with high leverage. But, as you start trading, you will determine the best choice based on your preferences.

How does intraday trading differ from regular trading?

Like most beginners, you also need clarification about how regular trading differs from intraday trading. Technically, there is only one difference between these two. The delivery of the stocks is not the same for both. In intraday trading, the squaring or settlement happens as the market closes. So, the orders you sell will settle against the orders you buy.

Due to this, you cannot transfer the ownership of the shares. But, for regular traders, it takes some days. You get delivery of the shares in a few days. However, for regular trading, the shares you sell will not appear in your Demat account after the transaction. It is primarily about time and delivery for both. Intraday is a little risky due to the time and market performance on that particular day. As for regular trading, you can wait for the shares to perform better on other days before selling your order.

Is it riskier? 

The most important question that investors ask is whether intraday trading is riskier. It is all about practice and building your acumen over time. Initially, it is challenging since you have only five to six hours to start your trade and square it off. However, to minimize the risk, you can constantly track the growth and fall of the shares. In most cases, shares are most volatile during the first hour when the market opens and the last hour when the market closes. The hours in between have lesser activity as compared to these peak hours. If you cannot square off the position by 3:15 pm, it is best to square it off at the best price. 

Expert tips for you

Many people think that intraday trading is a game for experts. But, with practice and guidance, you can also become an expert. The following expert tips will help you grow your wealth and have an additional source of income.

  • You need to enter and exit at the correct time: Choose a comfortable amount to enter and exit as soon as you see decent growth in the beginning. The greed for more can make you lose money.
  • Invest extra money from savings, not from necessary expenditures: Intraday trading comes with its fair share of risks. Ensure that you invest an amount set aside for additional value creation rather than out of necessity.
  • Keep analysing your performance: One way to succeed in intraday trading is by keeping track of your performance. This way, you will know which decisions to make and which to miss the next time you buy or sell.
  • Do not overtrade: The share market sometimes trends in different ways. The best way to go about intraday trading is to trade a limited number of stocks, at least in the beginning.
    So combine your understanding with these intraday trading tips and start investing your money right away.


Keep a small amount for intraday trading in the initial phase. This will help you get a proper idea of how it works. As you gain experience and become more familiar with the market, you can begin investing large sums and increasing your wealth. Find the best tips on finance and get the right deal for your investments with loans from Piramal Finance. They offer many types of loans at attractive interest rates. There are many articles and blogs on the website that will help you learn more about the world of finance.