Stock Market Trading:
Stock Market trading is among the best options for investment available to investors in India. The Indian Financial Market is regulated by an institution called SEBI. SEBI stands for Securities and Exchange Board of India. However, in the stock market, people invest from two perspectives. One is long-term investments and the other form of investment is intraday trading.
An individual may choose any of them based on their respective risk appetite and financial goals. Intraday trading is a lucrative one and comes with quick benefits. In intraday, one can make money easily. To start trading in India, it is necessary to open a DEMAT account and a trading account. Both the accounts are basic requirements for an intraday trader. With ever-growing advancements in technology and access to it, one may start trading online from the comfort of one home. Let’s understand what intraday trading is and what are benefits it.
What is Intraday Trading?
It refers to the buying and selling activity of financial securities like equities, commodities, currency, etc without taking overnight ownership of them. In intraday trading selling of securities will be done on the same day of purchase before the market closes at 3:30 pm in India. The timing for intraday trade depends and changes from country to country. It is also called day trading. In intraday trading, all the positions for that specific day will be squared off before the market closes. This type of trading is a short-term investment method.
Let’s take an illustration and understand how to do intraday trading:
XYZ Ltd. shares are trading at Rs. 750 per share at 9:30 AM. At noon the price of share rose to Rs. 800 per share.
An intraday trader, Mr. A bought 2000 shares at Rs. 750 per share in the morning. So, the total trade equates to Rs. 15,00,000. In the afternoon as soon as the prices of shares rose to Rs. 800 he sold his entire holdings for XYZ Ltd. now the trade equates to Rs. 16,00,000. Therefore, here Mr. A books a profit of Rs. 1,00,000
This is how one can do intraday trading. It is easy to do if one may devote the required time to it and are aware of few basic trading strategies to buy and sell during day trading.
Benefits in Share Market through Intraday Trading:
The benefits in the share market through the Intraday are listed below:
No Ownership, Less Risk:
In intraday trading positions are closed on the same day, the traders are not having ownership of shares which ultimately reduces the risk for the next day trading scenarios. A trader can settle the trade on the same day and start fresh from the next day.
No blockage of Capital:
Since the positions are closed on the same day, the capital does not remain invested for a long tenure. Trader may be able to generate decent returns from the trading activity
The facility of margin trade and high leverage:
A special margin is provided to intraday traders which is an additional benefit. For this facility intraday traders have to pay a nominal amount concerning the total trade size and can easily leverage this facility against losses incurred. High leverage allows the trader to invest and take benefits from minimum movements as well.
A trader may be able to make good returns in the intraday trade if the trading strategies to buy and sell securities are used appropriately and as per the market volatilities. Profits from intraday trade can be withdrawn easily. Intraday traders should enter the stock market with the intention of protecting their money first and apply strategies to make profits.