Intraday trading is popular, and for good reason. There are many advantages of intraday trading over positional trading that involves holding onto the stock for an indefinite period. On the other hand, in intraday trading, you purchase a stock and sell it on the same day during market working hours. Doing so can help you see the profit or loss you have incurred when trading in the share market.
Let’s look at some of the leading benefits of intraday trading.
- Intraday trading gets you better returns on small investments. By assuming a position in the markets, with a view to squaring it off, before the end of the day, you can capture the opportunity of earning tremendous returns, provided you play it smartly and wisely.
- With intraday trading, your capital is not blocked when market hours are over. By analysing the trend of the stock market you can make your trade during the day, and earn a profit after the sale.
- Intraday trading can help you make money in a shorter frame of time, that is within a given day. You can evaluate your day’s profit or loss through the output of the day trading in the stock market.
- You stand to benefit from the rising and falling of the stock market in a given day. By short selling you can earn a profit from falling stocks during a day trade.
- As an intraday trader, you need to be astute enough to catch the market trend, whether it is bullish or bearish, and make your trade accurately. You stand to earn a profit in bearish as well as bullish markets.
- The brokerage involved in intraday trading is far less than that for delivery-based trading.
- Stock markets can crash overnight due to various reasons, including global cues, even after market hours. On the other hand, as a day trader you are not affected by such information as your positions are closed during the day.
- If done rightly and in a professional manner, you can assume intraday trading as a lucrative and successful business. All it requires is the necessary capital, a computer and uninterrupted Internet connection to trade.
- To be a successful intraday trader, you need to analyse chart patterns and make your trades accurately. It does not call for a deeper understanding of analysing fundamental and technical knowledge of the stock you are trading in. You can also take crucial tips and advice from your full-service broker, such as Kotak Securities, to trade in the stock market.
- As the Sensex continues to rise, you can benefit from day trading with substantial profits, provided you time your trading accordingly.
Intraday trading appears simple, effortless and offers you the promise of earning tremendous returns in a short span of time. However, although the lure of making money quickly and in a short time frame is high, the probability of suffering a breakdown, financial loss and despair is equally high if intraday trading is not conducted in a professional manner. Before you begin day trading, it can be of great help to have accurate market information, discipline and fundamental knowledge.