What is intraday trading?

Intraday trading, or day trading, involves buying and selling stocks within the same trading day to capitalise on price fluctuations. Historically seen as a domain for professional traders and financial firms, the rise of digital platforms and internet access has made intraday trading accessible to everyone. Both beginners and experienced traders can benefit from it, but understanding the fundamentals is crucial before diving in.

The key difference between regular trading and intraday trading lies in the handling of stock ownership. In intraday trading, all positions are closed within the same day, so there is no transfer of ownership. In regular trading, stocks are held longer, and ownership is transferred to your Demat Account. That means you can keep the shares for weeks, months, or even years before selling them. While intraday trading aims for quick returns within a single day, regular trading suits long-term investments.

Intraday trading relies heavily on real-time market conditions and stock price fluctuations within a day. To successfully execute an intraday trading transaction, you must closely monitor the market and refer to technical analysis. These activities require time and attention. Juggling your work and intraday trading might be difficult if you have a full-time job during trading hours.

Intraday trading has the potential to offer high returns and is an attractive option for the same reason. However, the high returns call for higher risks. Thus, accept the associated risks to succeed at intraday trading.

As mentioned, intraday trading involves squaring off positions of stocks before the market closes. For this purpose, a stock that offers a lot of liquidity is considered most suitable.

Liquid stocks sell out quickly because their trading occurs daily and in large volumes. With a liquid stock, you can quickly move out of your position even if you possess many shares. Since so many people are trading using these stocks, selling a large number is not very difficult.

Stocks from large-cap companies are generally highly liquid and are a good choice for intraday trading.

The following indicators can help you execute intraday trading transactions:

• Moving average: This indicator connects the average closing rates over a while and can help you determine the underlying movement of the price of a stock.

• Bollinger bands: A bit more complex than moving averages, this indicator displays three lines: the moving average, an upper limit, and a lower limit. These three lines can indicate the underlying price movement of a stock better than the moving average.

• Momentum oscillators: This indicator helps measure how a security’s price has changed over time.

• Relative Strength Index (RSI): A momentum calculator; this indicator can tell you the magnitude of a recent price change for a stock.

With the rising popularity of intraday trading, it is crucial to understand how this practice can benefit you. The benefits of intraday trading are as follows:

• The margins offered to traders are comparatively higher than those offered to investors.

• Intraday trading has the potential to fetch higher returns than traditional investment options.

• The brokerage charges levied for intraday trading are lower.

• The horizon for strategies to pay off is short to medium.

To start intraday trading, choose the correct brokering partner and open a Trading Account and a Demat Account. You can select HDFC Bank DigiDemat Account, which offers a safe, online, and seamless mode to keep track of your investments.

HDFC Bank Demat Services offers you a Safe, Online, and Seamless mode to keep track of your investments. Equity, Mutual Funds, Initial Public Offer (IPO), Exchange-Traded Funds (ETF) - Index & Gold, Bonds, Non-Convertible Debentures (NCD)

It would help if you also looked for the right tools to assist you in your intraday trading activities. The tools chosen could include tracking stocks, technical analysis, or taxation purposes.

Lastly, you will need to monitor the stock market and monitor trends in price movement. Reading and keeping up with the stock market can benefit you as you begin intraday trading.

HDFC Securities provides opportunities for traders of all kinds to participate in intraday trading. You can use the multi-trading platform offered by HDFC Securities and execute your intraday trading transactions online from the comfort of your home. HDFC Securities is equipped with a robust research team and hires well-qualified analysts. To help you narrow down stock options you can trade, HDFC Securities offers technical analysis and daily tips.

Are you looking to open a Demat Account? Click here to get started.

Explore the intraday trading facilities offered by HDFC Securities by clicking right here.

Want to know more effective tips for Intraday trading? Click here to get started!

*Terms and conditions apply. This is an information communication from HDFC Bank and should not be considered as a suggestion for investment. Investments in the securities market are subject to market risks; read all the related documents carefully before investing.