What is Intraday Trading? - Meaning, Benefits, Features

In intraday trading, traders buy and sell stocks in a single trading session before the market closes. Since the trades are settled on the same day, the trader does not have any ownership of the stock.

In Intraday trading, you get leverage from your broker. Leverage increases your purchasing power by adding more quantity with less amount. A trader can buy more with the use of broker funds. It can amplify gains but also comes with associated risk.

Short selling means selling at a higher price and buying it back at a lower price. In day trading, short selling is possible, but not when taking delivery of stocks.

Identify the stock which is volatile and has a high trading volume. Add it to your watchlist and start observing the price behaviour.

Analyse the selected stock/index with various technical analysis tools. One of the most commonly used tools is moving averages. Apply moving averages to the price chart to get an idea of the ongoing trend. Suppose the stock price is trading above the 20-day moving average, which indicates an upward trend and vice versa.

Traders also use volume and liquidity to predict the future price behaviour.

After analysing, execute the buy/sell trade based on your analysis. You can buy at a low price and sell at a higher price on the same day. Interestingly, in day trading, short selling is also possible. Short selling means selling at a higher price and buying it back at a lower price.

While doing intraday trading its important to take calculated risks to avoid big losses. To limit the risk, use stop-loss orders.

It is the most common and widely used technical indicator to identify the trend. When the stock price is above the moving average of a certain period, the stock is considered to be in an upward trend and vice versa.

It is more advanced than the moving average. It consists of three lines. Upper band, lower band and middle band. The bands get wider during high volatility periods and get narrower in low volatility periods. When the price reaches the upper band, it is considered overbought, and on the lower band, it is oversold.

It is a momentum oscillator that measures the speed and change in the price movements. When RSI is below 20, the stock price is oversold, and RSI above 80 is overbought. The range between 20 and 80 is the neutral zone.