Introduction

Intraday trading , also known as day trading , involves buying and selling stocks or other financial instruments within the same trading day to profit from short-term price movements. Unlike long-term investing where you hold assets for months or years, intraday traders square off all positions before markets close each day. It’s a fast-paced, high-risk, high-attention trading style that requires discipline, clear strategy and strong risk management.

What is Intraday Trading?

• Definition: Intraday trading is the process of buying and selling securities , like stocks , within the same trading session. All positions must be closed before the market shuts to avoid overnight risk.
• Objective: Profit from short-term price changes during the day rather than holding assets for dividends or long-term growth.
• Instruments: Stocks, indices, futures, options (depending on your broker and market).

Because positions don’t carry overnight, traders focus on price volatility and liquidity rather than long-term fundamentals.

How Intraday Trading Works (Step-by-Step)

1. Open a Trading & Demat Account – Choose a SEBI-registered broker with good execution speed and low brokerage.
2. Choose Stocks or Instruments – Focus on high-liquidity stocks with narrow bid-ask spreads so you can enter and exit quickly.
3. Analyse Price Movements – Use technical analysis, charts, indicators and live market data to spot opportunities.
4. Place Buy & Sell Orders – Ensure all trades are executed and squared off before market close.
5. Manage Risk with Stop-Loss – Use stop-loss orders to limit losses on every trade.

Why traders do Intraday trading

Pros:

• Quick profit potential from intraday price swings.
• Liquidity allows easy entry/exit during market hours.
• Avoid overnight risk that comes with holding positions.
• Lower brokerage charges (no delivery expenses).

Cons / Risks:

• High volatility and risk can wipe out capital quickly.
• Frequent trades = higher cost (brokerage + taxes).
• Requires constant monitoring and fast decision-making.
• Emotional stress and overtrading can harm performance.

A regulator study estimating that up to 70% of intraday traders may incur losses highlights how challenging it can be for new traders.

Basic Rules Every Beginner Must Know

• Close all positions before market close, usually enforced by brokers if you forget.
• Use stop-loss orders to limit loss on every trade.
• Trade only liquid stocks with steady volume.
• Avoid overtrading , stick to a few high-probability setups.
• Never trade money you cannot afford to lose.

These basic rules help protect your capital and keep risk in check.

Popular Intraday Trading Strategies

Here are some strategies beginners may explore:

1. Momentum Trading

Trade in the direction of the strong trend , buying when prices are trending up, selling when trending down.

2. Breakout Strategy

Identify key support/resistance levels and trade when price breaks out with volume.

3. Scalping

Make many small trades with small profit targets , quick entries and exits.

4. Reversal Trading

Trade based on signs of a trend reversal, using candlestick patterns and indicators.

5. Correlation / Sector Based

Use sector or index movement to inform stock direction , if the index is strong, related stocks may follow.

All strategies require discipline, clear entry/exit rules, and solid risk management.

Tools and Indicators Worth Knowing

Beginners often rely on a few key technical tools:

• Moving Averages (MA) , smooth price trends.
• Relative Strength Index (RSI) , momentum indicator.
• VWAP (Volume Weighted Average Price) , intraday trend line.
• Pivot Points and support/resistance levels , potential price reaction zones.

These help identify good entry and exit possibilities but must be used with broader strategy and risk controls.

Choosing Stocks for Intraday Trading

• Prefer highly liquid stocks , they allow quick trade entry/exit without big slippage.
• Look for price volatility , enough movement during the day to make profit possible.
• Large-cap and actively traded stocks often suit beginners because of volume and predictable bid-ask spreads.

Avoid illiquid small caps that may trap your position or widen spreads.

Beginner’s Checklist Before You Start

✔ Open a SEBI-registered trading + demat account
✔ Learn basics of technical analysis
✔ Start with small capital , no high leverage
✔ Practice stop-loss and risk management rules
✔ Use demo or paper trading before real money
✔ Track and review performance to improve

These steps help reduce costly mistakes and improve decision-making as you gain experience.

Final Thoughts

Intraday trading in 2026 offers both opportunities and challenges. It’s fundamentally different from long-term investing because of its fast pace, high risk and need for discipline. While it can yield quick gains, beginners should prioritize education, strategy, risk control and constant learning. Start small, build confidence over time, and never trade more than you can afford to lose. With the right preparation and mindset, prudent intraday trading can be part of a broader market participation plan , but always remember that risk management and discipline are the cornerstones of sustainable success.

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