Intraday Trading

Intraday Trading simply means buying and selling stocks, securities and other financial investments within a single trading day.

Intraday Trading is trading for that one day only.

A prefix in the English language, "intra" means "within." Derived from the Latin word "intra" meaning "on the inside," the prefix is seen in modern American English usage in common words such as intracellular, meaning within a cell; intracoastal, meaning within the coastline, and intramural, meaning within a single school or institution. The word "intraday" is often heard in reference to the financial world in descriptions of market trends.

Intraday trading, often called "day trading," is the practice of opening and closing a position in any financial market on the same day. Day traders profit from small and quick fluctuations in stock prices. This contrasts with long-term investing, where a position may be held for months or years. The risks in day trading are extremely high, but the potential rewards are also great. There are many benefits to intraday trading.

Intraday trading is a difficult skill to master. well over 50% of those who try it fail. But the techniques can help you create a profitable strategy and, with enough practice and consistent performance evaluation, you can greatly improve your chances of beating the statistics.

Intraday trading should be for small, quick wins.

Many people get into intraday trading expecting to make quick returns with minimal effort. In reality, around 80% of day traders lose money.

Intraday traders can have one rule: set a maximum loss per day that you can afford (both financially and mentally) to withstand.

Whenever you hit this point, take the rest of the day off. Inexperienced traders often feel the need to make up losses before the day is over and end up taking unnecessary risks as a result.

Advantages of Intraday Trading :

Minimum amount required for intraday trading. There is no more requirement to lock up large amounts of money.

Transaction cost will be low for Intraday.

High Liquidity in A group stocks.

Easy affordability for individual investors. Traders can buy even small quantities.

Numerous oppurtunities.

No need to analyse fundamentals.

Another nice advanatage to intraday trading is you can sell short as easily as buying long so you make money in both up and down markets.

Intraday trading provides a fun, flexible, efficient, and affordable method to profit on daily swings.

You can trade the markets easy and fast.

With intraday trading you know exactly where you are at the end of each day without the risk involved of holding deliveries for long periods of time.

Anyone who follows the stock market knows that prices can open up the following morning at substantially lower levels from where they closed the previous day. Overnight risks can be significant. If major economic or government events occur outside normal trading hours, this could severely affect the stock market's reaction the following day. Intraday traders usually sell all or most of their positions by the close of a day's trading session. Thus they are not at risk when unforeseen events influence the market overnight. They start the next day with no position.

Day traders who have developed a successful trading strategy can rely on it for their primary income. Many work from home and aim to make earnings comparable to salaried jobs. This contrasts with long-term investing, where daily or monthly profits are not usually expected. The returns from long-term investing are not often treated as ordinary income by most investors, and they maintain jobs independent of their stock market trading. Day traders are a special class of worker who generate consistent income from trading as their primary job.

Perhaps the most significant benefit to day trading is the potential for huge returns. Successful traders who have spent years of experience developing an understanding of the intraday markets can make extraordinary earnings. This is rare, however. Many successful day traders earn modest livings. But the potential for wealth is always present.

Disadvantages of Intraday Trading :

Depending on how often investors trade, brokerage can accumulate.

Another potential drawback is underlying fluctuations.

Liquidity is another benefit that can be a problem when small cap stocks are thinly traded. If there's a large gap between the bid and ask price, it could be a sign that its an illiquid small cap.

In side-ways market, stocks lacking a general direction and intraday will be difficult too.

Less skilled traders, may lose money in intraday trading. Difficult for less skilled individuals to make consistent money.

Traders without using stop loss may lose money in intraday trading.