What is intraday trading Rules? brokerage fees for intraday trading. how to start intraday trading: What is intraday trading If you also want to know this, then you have to read this article till the end. Intraday trading is a dynamic and exciting form of stock trading in which stocks are bought and sold within a single trading day. In intraday trading, the position does not have to be held till the night. Unlike traditional investment strategies that aim for long-term growth, intraday traders track short-term price movements to potentially make profits.
If you also want to know how to start intraday trading then read this article completely. Intraday trading can be extremely risky because if not managed properly, you can end up with huge losses. However, there are many advantages of intraday trade as compared to disadvantages, which are going to be discussed in this article. In this article, we are going to tell you about What is intraday trade? intraday trading rules, and how to start intraday trading.
What is Intraday Trading?
Intraday trading is also known as day trading. It refers to the buying and selling of stocks and exchange-traded funds within the same trading day. Traders aim to profit from short-term price fluctuations that occur throughout the day. Intraday trading is characterized by its focus on price movements and volatility during regular trading hours, without holding positions overnight.
Intraday trade provides the facility of placing stop-loss orders to avoid any losses. Additionally, you can trail the stop loss to book a profit if the price of the stock you bought moves up. However, there are many disadvantages of intraday trade, such as we take more trades in order to book more profit, due to which we may have to pay more brokerage and taxes. To avoid losses in intraday business, you should understand the market trend and use indicators like moving averages. “What is intraday trading Rules? brokerage fees for intraday trading. how to start intraday trading”
Advantages of Intraday Trading
- Leverage for Increased Profits:- Intraday traders often utilize leverage, which allows them to control a larger position with a relatively smaller amount of capital. Leverage enables traders to access higher-value trades with low capital, thus potentially increasing returns on successful trades.
- Minimized Overnight Risks:- Intraday traders close their positions by the end of the trading day, eliminating the loss to overnight market risks. Unexpected events or news that occur after market hours do not impact intraday positions, protecting traders from potential adverse market movements.
- Flexibility for Short Selling:- Intraday trade allows traders to profit from both rising and falling markets. Short selling, where traders sell borrowed stocks with the intention of buying them back at a lower price, can be efficiently executed in intraday trading.
- Lower Capital Requirement:- Intraday trade typically requires a smaller initial capital compared to long-term investing or delivery-based trading. Traders trade on margin, allowing them to control larger positions with a fraction of the total trade value.
- Focus on Price Movement:- Intraday traders focus on analyzing price movements, charts, and technical indicators within short timeframes (30s-5 minutes). This allows traders to exploit short-term market inefficiencies and capitalize on trends and patterns.
- Profit from Small Movements:- Intraday traders can profit from even minor price movements by executing multiple trades throughout the day. Accumulating small gains from these movements can lead to substantial profits when combined.
- Skill Development:- Intraday trading requires constant monitoring, quick decision-making, and precise execution. Engaging in intraday trading can help traders develop valuable skills such as risk management, discipline, and emotional control.
Disadvantage of Intraday Trading
- High Risk and High Reward:- Intraday trading is renowned for its potential rewards, but it’s equally known for its high risk. Traders can experience substantial losses due to the rapid price fluctuations that occur within a single trading day.
- Time Intensive:- Intraday trade demands a substantial time commitment. Traders need to actively monitor the markets during trading hours, typically from 9:00 AM to 3:30 PM. This requirement can be challenging for individuals with other works.
- Skill and Knowledge:- Successful single-day trading requires a deep understanding of technical analysis, chart patterns, and market trends.
- Emotional Pressure:- The fast-paced nature of intraday trading can lead to emotional stress and pressure. The need to make quick decisions and manage rapid changes in positions can impact traders’ mentality.
- Leverage Risks:- While leverage can amplify profits, it also increases losses. Traders using leverage are exposed to higher risk levels, and a single wrong move can result in big losses.
- Market Volatility:- Intraday traders are more susceptible to market volatility, as short-term price movements can be unpredictable and influenced by various factors, leading to unexpected losses.
- Transaction Costs:- Frequent trading results in higher transaction costs, including brokerage fees and taxes. These costs can eat into profits, especially for traders making numerous trades.
- Constant Monitoring:- Intraday traders must continuously monitor their positions and market movements throughout the trading day. This requirement can be physically and mentally exhausting.
- Discipline and Control:- Maintaining discipline and following a well-defined trading plan is essential in day trading.
Stop Loss and Targets
To avoid losses in intraday trade, you should understand the market trend, and use indicators like moving averages.
If we talk about stop loss in intraday trade, then stoploss is very important in it, so it is very important to understand stoploss. In this article, we are going to understand stoploss and target with an example.
Suppose there is a company named ABC and its market price is Rs.500. If you think of buying 100 shares of this company, then normally you should have (100×500) Rs 50,000. But in intraday trading, you are given a margin ranging from 2.5x to 5x. So you will need just Rs 10,000 (50,000÷5) to buy these shares.
Now if we talk about the target, then you keep a target of 510 ₹ at the market price of 500, with a stoploss of 95 rupees, then you have a chance to earn 1000 rupees, at a loss of 500 rupees. The risk-reward ratio here is 1:2. On the small target of Rs 10, you get a 10% (1000÷10000) rate of interest rate. Here your stop loss is Rs.5, which can result in a loss of (500÷10000)5% of your total capital. “What is intraday trading Rules? brokerage fees for intraday trading. how to start intraday trading”
Brokerage Fees for Intraday Trading
Different brokerage apps charge different brokerage fees for intraday trading. However, some brokerage apps also provide free trading facilities. In the table below, we have discussed the broker fee charged by various brokerage apps.
|Name of the App||Intraday Brokerage charges|
|Zerodha||0.03% or ₹20 whichever is lower per executed order.|
|Groww||0.05% or ₹20 whichever is lower per executed order.|
|Angel One||0.25% or ₹20 whichever is lower per executed order.|
|Upstox||0.05% or ₹20 whichever is lower per executed order.|
|Dhan app||0.03% or ₹20 whichever is lower per executed order.|
Intraday Trading Tips
Small Time Frame Charts:- Stock charts span diverse time frames, from 1 minute to 1 month, with each candle representing a chosen period. For intraday trade, optimal time frames range from 1 to 15 minutes.
Multi Time Frame Analysis:- Utilize a 1-day time frame for preliminary stock selection and confirm trades using small time frame charts. This methodology heightens trade accuracy and probability, with practice enabling seamless multi-timeframe analysis.
Avoid Early Trading:- During the initial 15 minutes (9:15 AM to 9:30 AM), trading is emotion-driven and influenced by the previous day’s news. Waiting for this period to elapse allows for a clearer understanding of the day’s trend, reducing impulsive decisions.
Aim for Higher RR Ratio:- The risk-reward ratio (RR ratio) dictates the risk undertaken for potential reward. Strive for a favorable ratio, such as risking Re. 1 to earn Rs. 2 to Rs. 3. This approach ensures higher potential gains while minimizing exposure to risk, and optimizing trading outcomes. “What is intraday trading Rules? brokerage fees for intraday trading. how to start intraday trading”
How to Start Intraday Trading
To do day trading in the stock market, you simply have to go to Playstore and install any trading application which suitable for you. After that open the application and create a new Demat account, if you already have a Demat account then simply log in through email. If you do not have a Demat account, then you will have to create a new Demat account, which we are going to tell you in our next article.
Intraday trading, also known as day trading, offers an engaging and dynamic approach to stock trading, involving the buying and selling of stocks within a single trading day, it comes with significant risks and demands careful attention.
Starting intraday trading involves selecting a suitable trading application, creating or accessing a demat account, and actively monitoring the markets during open trading hours. It’s essential to know technical analysis, chart patterns, and market trends to make quick and accurate decisions. Setting stop loss and target levels, along with maintaining discipline and following a trading plan, is crucial to managing risk effectively.
Brokerage fees for intraday trading vary among different platforms, and it’s essential to choose a brokerage app that aligns with your trading needs and offers competitive prices. In this article, we have given you information about what is intraday trade, who should do it, what precautions should be taken while doing day trading and what are its disadvantages and advantages. “What is intraday trading Rules? brokerage fees for intraday trading. how to start intraday trading”
Yes, you can do day trading in 100 rupees also, but for your benefit, it is advised not to trade less than 10,000 rupees, otherwise, you will have a loss in feed also, because trading in 100 rupees The maximum amount out of your profit will go towards brokerage and taxes.
If you know intraday trading, then you can earn thousands of lakhs every month from it, and if you do not know how to do intraday trading, then you can also lose lakhs of rupees.
If you do not exit your intraday trade before the market closes, or forget to exit, your trade will be automatically exited and you will have to pay penalty charges in addition.
Yes, intraday trading is very risky and challenging as compared to other types of trading, as you cannot hold your position overnight, whether you are in loss or profit. That’s why intraday trading should not be done without learning.