As intraday trading involves the purchase and sale of stocks in the stock market within a single day, it is considered risky for some traders. This is so for beginners and experienced traders and investors alike. Obviously, you may have guessed that if trades are opened and closed on the same market day, you may well earn high profits through intraday trading, but this may come at increased amounts of risk. If you grasp and identify the risks you may face while engaged in intraday trading, you may think of strategies to combat risks, or at least, mitigate them.
Since the activity of intraday trading involves the buying and selling of stocks on the same day, there is no real holding of stocks. You have to close all your intraday trades within the market day period and you may not be required to open a Demat account. Although most traders who partake in any kind of trading do open Demat accounts, and the Securities and Exchange Board of India (SEBI) has mandated the opening of Demat accounts when you are engaged in any stock trading, you should open one. Furthermore, as tempting as it may appear to make gains within a day of intraday trading or day trading, you should know that trades are short-term ones, and in that sense, you are more of a trader than a real investor.
Any trading and investing that promotes short-term returns comes with a substantial level of risk. Intraday trading can be an appealing prospect for the best traders and they may even earn their daily bread out of it. However, knowing that the following risks may befall traders is necessary for intraday trading:
You can open a Demat account online and start your investment ride with reliable brokers like Motilal Oswal. With an online platform that teaches you the ‘tricks of the trade’ quite literally through blogs and videos, you can choose day trading or make your selection from various investment plans to grow your portfolio.
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