General Skills Finance Features of Intraday Trading

Features of Intraday Trading

There are two primary stock exchanges operating in India, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). These two exchanges operate their own indices or benchmarks. The sensex meaning Sensitive Index is a composite of 30 stocks which is managed by the BSE. The Nifty is an index which is managed by the NSE. As an investor, it is important to understand Nifty meaning to invest in the stock market. Both these exchanges have electronic screen based trading available for investors and traders. This screen based trading has made intraday trading very popular among the people. This handy guide explains what is intraday trading. Once you know the intraday trading meaning, you can open a trading account and start making these trades. These are the features of intraday trading: 1. Squaring off trades: This feature distinguishes intraday trades from other delivery based trades. In delivery based trades, the shares are actually debited or credited to the demat account. In intraday trades, the purchase and sale is done on the same day. The profit or loss reflects in the margin account. 2. Low Capital investment: As compared to delivery based trading, the capital investment in intraday trading is quite low. Only a certain amount of margin money has to be put up to trade. If you trade in highly liquid stocks, you will have a margin multiple which means you will be able to trade for a value higher than the margin money you put up. The margin facility is given by the broker so before you open a trading account, it is important to check the margin facility given by the broker. 3. Immediate returns: The returns in delivery based share trading are very uncertain. The market can swing in any direction and it is difficult to predict how a company may perform. A profitable company in one year may go into debt resolution the next. On the other hand, in intraday trading, you can quickly make your profits the same day. However, it is important to remember that the chances of loss are equally high. That is the feature of intraday trades. As a trader, it is important to make trades such that the overall 4. Margin account: Intraday trading is based on leverage. Depending on the share, the stock exchange decides a margin multiple. If this multiple is 1, that means your margin account must have cash equal to how much you want to trade. The higher the multiple, the higher the leverage. A multiple of 20 means your total trade value can be 20 times the amount in your margin account. To understand intraday trading meaning, it is important to know how margin money works. This has to be deposited in the trading account before any intraday trades can be made. 5. Risky trade proposition: Intraday share trading by default is risky since there are a lot of price fluctuations in each share. The trade has to be squared off on the same day even if the trader has not made a profit. It is not possible to keep an eye on the price of a share for entire market hours. This is why it is better to input the stop loss and the exit price in the trading account so that the trade automatically gets squared off when the prices are reached. 6. Can convert to delivery trades: It is always possible to convert an intraday trade into a delivery based trade. To do this, you only need to select the option to convert an intraday trade into a delivery trade.

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