Before getting into the basics of intraday trading, it is important to understand what intraday trading is. The term intraday means “during the same day”. When a trader purchases and sells stocks listed on a stock exchange on the same trading day, it is known as intraday trading or day trading.
The primary objective behind intraday trading is to realise the profits on the same day. It also minimises trading risks as the funds are not blocked for an extended period.
What is intraday trading?
Intraday trading involves entering and exiting a trading position within a single trading session. Traders try to benefit from small price moves and make quick profits. Day trading positions are closed before the trading session ends, which protects the traders from the overnight risk of holding stocks.
Now, let us look at some intraday trading tools and techniques that beginners can use to start their learning journey for becoming intraday traders.
How does intraday trading work?
Intraday trading timeframe is done through online trading platforms that work on a real-time basis. The trader buys and sells the same number of shares of the same company within the trading hours for the day.
While using the online stock trading platform, traders must specify that the transaction is intraday. They can buy or sell stocks listed on the exchange, specifying the quantity and the price. The position acquired by the trader (buy or sell) must be squared off at the end of the day. This means that if a trader has bought some stocks, they must be sold before trading on that stock exchange ends for the day.
A trader must also know how to sell intraday shares to make profits. If the trader has sold some stocks instead of buying it is called short-selling. In this case, the same number of shares of the same company must be bought before the trading hours end.
Example: Calculating intraday turnover, Trader X buys 100 shares of ICICI Bank @ ₹930 at market opening. During the day the stock price rises to ₹960 and the trader squares off the position by selling 100 ICICI Bank shares @ ₹960. This gives him a profit of (960-930)*100= ₹3,000.
Features of Intraday Trading
Intraday trading involves buying and selling stocks within the same trading day. Key features include:
- No overnight positions: All trades must be squared off before market close.
- High leverage: Traders can use margin to amplify positions.
- Quick decision‑making: Trades are based on short‑term price movements.
- High volume & volatility: Frequent price swings create profit opportunities.
- Lower holding period: Positions are opened and closed on the same day.
Benefits of Intraday Trading
Intraday trading offers several advantages:
- Fast profits: You can book gains multiple times in a day.
- No overnight risk: No exposure to after‑market news or gap ups/downs.
- High liquidity: Most active stocks allow quick entry and exit.
- Low capital requirement: Leverage lets you trade larger positions with less capital.
- Daily learning: Rapid trades improve decision‑making and market understanding.
Risks of Intraday Trading
Like all trading styles, intraday has risks:
- High volatility risk: Prices move fast and can quickly erase profits.
- Emotional stress: Quick decisions increase stress and mistakes.
- Leverage trap: Margin can amplify losses as well as profits.
- Transaction costs: Frequent trades mean higher brokerage & taxes.
- Market timing risk: Poor timing can wipe out gains.
Best Intraday Trading Indicator
No single indicator guarantees success, but popular intraday indicators include:
- VWAP (Volume Weighted Average Price): Best for intraday support/resistance.
- EMA (Exponential Moving Averages): Short‑term trend direction (e.g., 9/21 EMA).
- RSI (Relative Strength Index): Overbought/oversold signals.
- MACD: Trend and momentum confirmation.
- Bollinger Bands: Volatility and breakout signals.
TIP: Combine indicators (e.g., VWAP + RSI) to filter false signals.
Tips to Follow for Intraday Trading
Follow these best practices:
- Plan your trade before market open.
- Use strict stop‑loss to manage risk.
- Trade liquid stocks for quicker entries/exits.
- Avoid overtrading — quality over quantity.
- Follow news & events that impact stock movement.
- Stick to your strategy and avoid FOMO.
How to Make Profit in Intraday Trading?
Profit in intraday trading requires:
- Trend identification: Trade with the market direction.
- Entry & exit plan: Set precise entry, stop‑loss, and targets.
- Risk management: Never risk more than a small % of capital per trade.
- Discipline: Follow rules — no emotions, no revenge trading.
- Position sizing: Adjust size based on volatility and risk tolerance.
How to Choose Stocks for Intraday Trading?
- High liquidity: Easy entry and exit (e.g., Nifty 50 stocks).
- High volume: Strong participation reduces slippage.
- Good volatility: Enough movement to profit but not excessive risk.
- News catalysts: Corporate or economic events driving momentum.
- Tight spreads: Lower cost of trading.
How to Do Intraday Trading
Step‑by‑step process:
- Select Your Stocks: Based on volume & volatility.
- Check Pre‑Market Trends: Understand gap ups/downs.
- Set Entry & Stop‑Loss: Before placing trades.
- Monitor Levels: Use real‑time charts and indicators.
- Book Profits: At predefined targets.
- Exit by Market Close: Close all positions before the session ends.
Alternative Trading Methods
If intraday isn’t your style, consider:
- Swing Trading – Holding positions for days/weeks to capture trends.
- Positional Trading – Long‑term trades based on fundamentals/technicals.
- Options Trading – Strategies like buying calls/puts or spreads.
- Delivery Trading (Investing) – Buy & hold for months/years.
- Algorithmic Trading – Rules‑based automated trading.
Intraday trading brokerage
Traders are required to pay intraday brokerage charges to their broker for executing a day trade. Intraday trading brokerage includes:
- SEBI regulatory charges – 0.0002% of transaction value
- Securities Transaction Tax (STT) – 0.025% of sell-side intraday transactions
- Brokerage and GST on brokerage – Differs for each broker
- Transaction charges – 0.00275% per trade on BSE and 0.00325% per trade on NSE
- Stamp duty – Varies according to the location
Intraday trading vs delivery trading
Delivery trading is where investors can hold on to securities as long as they want, unlike intraday trading where the position needs to be squared off the same day. If an intraday position is not squared off, it gets converted into delivery trade, with a levy of delivery brokerage.
Benefits of intraday trading
- Reduces the risk of market downturns- Delivery trading blocks the amount for a considerable period. This opens up the trader to risks that come with significant price changes on the lower side in case the stock market faces a downturn.
- Higher profits– Intraday trading can yield higher profits as the trader can take full advantage of the rising stock prices on a particular day by using accurate investment strategies.
- Lower commission charges- Intraday brokerage is lesser than the brokerage charged by stockbrokers for delivery trading (Generally one-tenth). This is because delivery expenses of security transfer in the investor’s name are not included.
- Enhanced liquidity- Traders’ money is not blocked for a long period in this kind of trading. Since the purchase and sale of stocks happen on the same day, funds can be used for other financial requirements.
- Capital gains through market fluctuations- Intraday trading gives stock traders opportunities to make profits in both bullish and bearish markets, depending upon the trading strategy used.
Intraday Trading Indicators
- Moving Averages (MA) – Help identify short-term trends. If prices stay above the 20-period MA, it signals bullish momentum; below indicates bearish sentiment.
- Relative Strength Index (RSI) – Measures momentum and highlights overbought (above 70) or oversold (below 30) conditions for quick intraday reversals.
- Bollinger Bands – Track volatility. When prices touch the upper or lower bands, it signals potential breakout or correction opportunities.
- Volume Weighted Average Price (VWAP) – Shows the average price weighted by trading volume. Traders use it as a benchmark — price above VWAP indicates strength, below suggests weakness.
- Average True Range (ATR) – Gauges market volatility. High ATR means larger price swings (ideal for momentum trades), while low ATR signals range-bound conditions.
Final word
To make profits in the stock market, traders must have a strong understanding of intraday trading. Thoroughly analysing company charts is crucial for selecting stocks while also considering market volatility.
Unexpected market fluctuations can also lead to losses as the trader cannot hold the stocks. All intraday traders must pay close attention to intraday price movements and time the trades to make profits by using the short-term price fluctuations in the markets.
FAQs
Intraday can offer great profits, but it has an equal probability of losses. However, intraday trading is a good option for traders looking to make short-term profits and earn every day from the stock market.
No rule stops beginners from venturing into intraday trades. However, intraday trading requires high levels of understanding of stocks, prices and the market as a whole. Despite the theory, the real skill comes with practice. So, it is ideal for novice investors to begin with delivery trades and gradually explore the intraday market.
There is no restriction on the number of trades one can do per day. Some traders stop after they square off the first trade if they gain the desired profits. Otherwise, they enter more trades to reach the desired levels of profits.
Intraday traders must buy on every dip if the stock price chart is continuously making higher peaks. Whenever the chart makes a lower bottom, you should sell on every bounce back. The intraday trading tip is that the trend is verified if higher peaks are accompanied by higher bottoms.
Brokers often offer large leverage or margin to intraday traders. You may purchase more shares than your account balance allows thanks to the leverage option. For example, if your broker offers a 10x margin and your account balance is INR 10,000, you may purchase shares for INR 1 lakh.
Intraday trading involves buying and selling financial instruments within the same trading day, aiming to profit from short-term price movements.
Buying 100 shares of XYZ stock at ₹500 and selling them within the same day at ₹510, making a ₹10 profit per share.
Intraday traders make money by capitalizing on small price fluctuations throughout the day, using strategies like technical analysis, momentum, and breakouts.
Intraday trading profits are taxed as speculative business income and are subject to income tax slab rates. Losses can be set off against other speculative gains.