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Intraday trading: the risk with rewards

  • Posted Date: June 4, 2021

Intraday Trading has become one of the best ways to earn money through investing in stock markets. Many entrepreneurs have successfully been traders who possess knowledge of the stock market. They have earned money from it and have been able to set up their enterprises. Today trading has become a field of fascination among the young age as well. Along with the European countries, trading has captivated the attention of the Indians as well.


As in India, the importance of capital is felt when investing, trading has emerged to be a great option for the risk-takers in these situations. Besides trading with the regular stock market on a long term or short term basis, there is a new concept that has come out for the people who understand this platform well. It is known as intraday trading.

As understood by the name, ‘intra’ means within the day. And intraday trading would mean something which is related to the daily basis of the changing market. But that is not it. Intraday trading means buying and selling of stocks and other instruments on the same day. The definition might sound simple but its application and understanding is far from being simple. In this system, there is no change of the ownership of the order and one square off their position on the very same day. One benefit of the intraday trading versus regular trading could be seen that intraday trading can make purchases in stocks which are not available in the F&O segment.

What to keep in mind for intraday trading?

Although intraday trading can be beneficial, it also comes with some risks which are solely related to the market. Since traders have to rely highly on the study of the market, it is advisable that they consider the following parameters wisely

  1. Trader’s criteria

Before trading, a trader has to be sure about the amount he/she is going to invest in the stock market. This reduces a certain risk which is losing money due to lack of planning. The trader has to arrange the criteria he is going to follow so that he/ she can be aware of the risk involved in it.

  1. Checking corporate event

As corporate events can bring both losses and opportunities in the stock system, it is necessary for the trader to keep a regular check on it so that the person can grab the opportunity and leave away the untimed challenges that it brings with itself.

  1. Volatility and Liquidity

Volatility and liquidity are the most important factors which govern the stock market. High volatility means a large extent of opportunities in the market whereas low volatility indicates towards fewer opportunities in the same. This is helpful for the traders to know when to trade in the stocks.

Similarly, the factor of liquidity is important. Liquidity determines the entry and exit of the trader for the day and to place sizable trades. It is desirable that volatility does not come at the cost of liquidity. In India, the volatility could be really fluctuating which results in an undesirable result for the traders.

There are some stock markets which have been recommended by various experts of India which can support intraday trading. Some of them are listed below

  1. TATA Motors
  2. Bajaj Finance
  3. Jindal Steel and Power
  4. State Bank of India
  5. TATA Steel

There are some trading tips that could be useful for an intraday trader.

Tips to follow for intraday trading-

  1. Range trading- uses support and resistance levels so that the trader’s buying and selling could be estimated.
  2. Scalping- traders use to make numerous small profits on small prices which changes every day
  3. News based trading- it helps in seizing the opportunities from volatility by the help of the news on the same
  4. High frequency trading- traders also use complex and sophisticated algorithms which point towards the inefficiencies in the trading system.

In India, there is not a range of stocks that supports intraday trading. The traders sometimes lose a large sum of money when not invested efficiently in a system where enough information regarding the same was not provided. In these cases, the need for regulations comes in. The institution which is responsible for the regulation of stock market in India is known as Security and Exchange Board of India(SEBI). It was established in1992 when trading in the stock market started with zeal in the western countries. India could predict that the phenomenon is not going to be restricted in the advanced countries but will surely become a part of India’s economy as well.

SEBI has laid out certain criteria for intraday trading for the Indians. There are some guidelines laid by the regulatory body mentioned below-

  1. The profit from the intraday trading earned by the trader won’t be used for trading on the same day. Due to this regulation, the traders will have to “switch up their intraday strategies” so that they can accommodate the new ones.
  2. There is a minimum marginal money requirement. Unless the traders choose to fulfill it, they will not be able to leverage their trades even if they would require to do so.

These two regulations have been formulated to ensure the safety and security of both parties in intraday trading.

Even if intraday trading has become quite popular among traders who are not risk-averse, there are some pros and cons to be considered in the system

Pros and cons of intraday trading


  1. The position of the trader will not be affected by some overnight news which may include the chance of impacting the prices of the securities.
  2. The trader can raise to stop loss so that the losses could be minimized in the long run.
  3. The trader shall have the opportunity of greater leverage and higher margin


  1. As intraday trading is frequent in nature, it may end up having multiple costs.
  2. Due to the paucity of time, there might not be enough time to realize a profit before it closes down.
  3. Loses can amount quickly if some precautions are not taken.

With the increase of the people involved in the trading system in India, there is also a significant population interested in intraday trading. Due to this, there are many videos available online which could act like a beginner’s guide into the system. The intraday trading may sound a bit risky but when informed and researched well about the stock market, it may be very useful to some insightful traders.


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