What is intraday trading? It is a stock trading approach in which the trader enters and squares off positions within a single trading day. A trader in India could engage in intraday trading on the National Stock Exchange (NSE), which has listings of thousands of companies. One major advantage of trading on the NSE is that the exchange has the highest turnover in the country and it leads in the share volumes traded. The NSE index, Nifty, comprises 50 broad-based stocks, while Nifty Futures is popular among derivatives traders. If you are in the market for intraday trading opportunities, you are sure to find them here.
Should you trade on the NSE?
Intraday trading on the NSE comes with several advantages, although most of these are applicable when you trade on other Indian stock exchanges too. Let’s take a look at some of them.
- Capital does not remain blocked.
Intraday traders are obliged to square off any open positions by the end of the trading day. If the trader has bought any shares, they sell these off; if they have short-sold any shares, they buy these back. By market close, they will have pocketed their profits and paid off any losses, leaving their capital free for the next day’s trade. If the trader forgets to close any positions, the broker’s trading system will square them off automatically, thereby freeing their capital.
2.The output is clear by day end.
Intraday traders have to close their positions before the closing hour. This means they will know the results of each trade by market close. They can then review the day’s strategy and make modifications as needed.
3. Any market is tradeable.
The intraday trader’s skill lies in assessing the trend of the day and taking positions accordingly. In theory, a day trader should be able to earn profits in all kinds of scenarios, including bullish, bearish, and sideways markets.
4. Intraday brokerage is cheaper.
Intraday traders may have to place numerous orders on some days, and the brokerage costs can add up. Luckily, intraday traders usually enjoy lower brokerage rates than positional traders. Brokers like Kotak Securities even offer free intraday trading facilities.
5. Overnight news has no impact.
Delivery traders could see their share values dip if a major news event occurred after market hours. But intraday traders remain unaffected because they had closed out all positions before the news broke.
6. It could provide a side income.
Put together a good action plan with effective stop loss triggers and profit targets. This will ensure that the trades are closed automatically, leaving you with flexible working hours. However, you will have to devote enough time to research and analysis.
7. There is a greater potential for returns.
Intraday trading can provide higher returns than fixed deposits, postal savings, and so on. While the earnings per trade may be small, intraday traders carry out multiple trades every day. So, the overall profits could add up to a sizeable sum.
As the Indian stock markets grow and more people start trading, stock volatility and liquidity will increase as well. This could attract more participation from intraday traders. If you are new to it, take the time to learn the ropes and master some intraday trading strategies. Remember, planning is a key aspect of the intraday trader’s workflow. And successful intraday traders leave nothing to chance.