What You Must Know About Intraday Trading?
Same day transactions of the stocks are included in Intraday trading. Intraday trading is not similar to usual delivery trading. In Intraday trading, the net position of the trader in relative to last day is zero. Buying and selling happens same day. You can execute both the actions of stock market – buy or sell the position or you can sell the stock, later you can again buy it before the end of the day.
Profit gained or losses incurred are immediately credited or debited in your trading account the same day. This way your stock transactions are immediately updated. However, the fast transactions happening in Intraday trading is not reflected simultaneously in your Demat account.
Keeping close track on the movement of the company is very important in Intraday trading. A trader gets minimal window time frame of 5 hours to register a profit. Each intraday transaction must be duly closed by the broker. If it is missed, then it may incur losses for the trader. As a beginner, you must follow up your broker to close the transaction.
Intraday Trading Basics for a New Trader
Intraday trading is bit different than delivery trading. Usually for newbie traders, share market experts suggest to regularly scan business news and read finance articles. After doing company background check, set aside money to invest in stock market. However, in case of Intraday trading, it needs more than assessment of capital and knowing market valuation of a company. Intraday trading usually deals with new stocks of new companies each day.
Let us check how it can be helpful for a new trader:
- Intraday trading is attractive it offers better leverage over other delivery trading. It provides better margin but larger open position. Usually, a full-service broker fees range between 0.03% to 0.05% of the transaction value as brokerage charge. This is in addition to a minimum fee of around Rs. 30 per transaction. Discount brokers charge a flat fee per transaction. It ranges from ₹ 20 to ₹ 30 per trade.Example of brokerage fee calculated in Intraday trading for buying scenario: Let us assume, you buy 100 shares of Anonymous Banking Company at ₹ 400 and sold it same day at ₹ 450 then for buying side your transaction value will be 400 *100=40000. Your brokerage will be charged for intraday trading based on the transaction value by the full service broker.
- It is important to pre-define the time when you want to buy or sell stocks in intraday trading. This ensure you do not incur loss and earn profit from your stocks.
- As a starter of Intraday trading it is highly advisable to start with a small amount, preferably your spare money that you are ready to take risk with. Each day is a new beginning so small steps help in gradually stacking up your stocks and investment. If you start big in greed to earn fast due to nature of Intraday earning benefits, you may not be able to opt for any reverses in case of huge losses of money.
- Prepare a stop-loss plan. It is very important to gain less profits than incur heavy losses to be a long term Intraday trader. This stop-loss plan must define the price at which you want to stop loss and gain profit. Set a profit target and stick to it even if you see huge surge in stock prices. Sell it at your pre-defined price. This discipline itself ensures that you will set the precedence of becoming a successful Intraday trader.
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