What is Intraday Trading and How to Do It? A Trader’s Guide
Intraday trading, also known as day trading, is a style of trading where market positions are opened and closed within the same trading day. It’s fast-paced, requires precision, and demands a sharp understanding of market movements. Whether you’re a beginner looking to get started or a pro refining your strategy, understanding the core concepts of intraday trading is essential to maximize gains and minimize risk.
What is Intraday Trading
Intraday trading involves buying and selling securities—such as stocks, indices, or derivatives—within the same trading session. The goal is to capitalize on small price movements rather than holding positions overnight.
Unlike long-term investing, intraday trading doesn’t rely on fundamental analysis of a company’s performance. Instead, traders focus heavily on technical indicators, price action, volume, and short-term patterns.
How to do Intraday Trading?
1. Open a Trading & Demat Account with the Right Broker
Start by choosing a SEBI-registered broker that matches your trading style. To begin your investment journey, you’ll first need to open a Demat account with a trusted broker. Look for:
Competitive brokerage charges
A fast, intuitive trading platform (both web and mobile)
Real-time charting tools and analytics
Brokers like Findoc offer user-friendly platforms designed specifically for active traders.
2. Learn Technical Analysis and Understand the Risks
Before placing your first trade, ensure you have a basic understanding of:
Chart patterns
Indicators like RSI, Moving Averages, VWAP
Support and resistance levels
Also, recognize the high-risk nature of intraday trading and learn how to manage it wisely.
3. Practice with Paper Trading
Don’t jump in with real money immediately. Simulate trades using a demo account or paper trading tools to:
Test strategies
Analyze market movements
Gain hands-on experience without the financial risk
4. Pick Liquid Stocks That Align with Your Strategy
Focus on stocks with high trading volumes and price volatility. These stocks:
Offer easier entry and exit
React well to technical signals
Are better suited for short-term moves
Ensure the stock aligns with your indicator-based strategy.
5. Set a Clear Exit Plan and Stick to It
Before entering a trade, define:
Entry point based on your analysis
Target price to take profits
Stop-loss level to cut losses early
Avoid impulsive decisions and follow your trading plan with discipline.
Types of Intraday Trading
- Scalping: It involves traders executing quick trades, buying and selling shares in minutes to secure small gains throughout the day.
- Momentum Trading: It is based on shares with good price trends. Traders purchase stocks that are moving upwards or sell stocks that are declining to ride the trend.
- Breakout Trading: Here, the traders anticipate that the share price will break above a fixed high or fall below a fixed low. They then trade in the direction of the breakout.
- Reversal (Contrarian) Trading: It comes on the presumption that prices turn around after long moves. Traders purchase when prices are low and sell when prices are high.
- News-Based Trading: Traders respond instantaneously to news events such as company reports or government statements, which can cause sudden price movement.
- Algorithmic Trading: This employs computer programs to place trades automatically in accordance with predetermined rules and market information.
Read in Detail: What is Algo Trading?
Key Features of Intraday Trading
Intraday trading is when you buy and sell shares on the same day. Since all trades must be closed before the stock market closes, there’s no ownership transfer. If you don’t close your trades, your broker will do it for you. The concept behind these styles of trading is to make money from price movements throughout the day rather than holding shares for the long term.
Traders can also use margin, which is borrowing from their brokers, to buy larger positions. While leverage can magnify profits, it can also magnify their risk. New traders should understand how to do intraday trading, as it takes discipline to follow a trading plan and mitigate risk.
To do well in intraday trading, research and planning are key. Traders choose by looking at charts, using technical indicators, and watching price trends. Using stop-loss orders helps cut down losses and keep profits safe, making risk management very important.
Benefits of Intraday Trading
- Lower Risk: The trades are closed within the same day, thus, the traders do not have to face overnight risks. This minimises the effect of any sudden news or happenings that may influence the price of stocks during non-market hours.
- Lower Brokerage Charges: Intraday trading typically attracts lower brokerage charges than delivery-based trading because there are no transfer or delivery charges on the stock. This renders it a more economical choice.
- Quick Profit Opportunities: With proper study and planning, investors can make profits out of small intraday price movements. Profits can be faster than in a long-term investment.
- High Liquidity: Intraday trading avoids tying up of funds for the long term. Investors can employ their capital on a daily basis and have financial flexibility.
- Profiting in Any Market: Traders can benefit from both rising markets (by buying low and selling high) and falling markets (through short-selling strategies).
How to Choose Stocks for Intraday Trading?
Selecting the right stocks is essential for success in intraday trading. To better understand intraday trading meaning, an intraday stock trade is selecting shares that allow you to buy and sell within the same day. When you are learning about the different types of intraday trading, stock selection is an element crucial to defining your trading strategy.Choose stocks that have high liquidity, which means they are bought and sold in high volumes consistently. High-volume stocks help traders as they enable them to enter and exit effectively.
Also, select shares with good volatility so there is good price movement to earn profits. Stick to reputable companies listed on the primary index, as they tend to follow the trend of a market. Follow financial news regarding sector performance and opportunities, but avoid penny stocks or low-volume shares since they most often involve risks and unpredictability.
Alternative Short-Term Trading Methods
- Standard Trading: Retaining stocks in the long run to earn both capital appreciation and dividend income. While brokerage charges apply, consistent returns usually pay for these in themselves.
- Swing Trading: Basing stocks for a couple of days or weeks to reap the benefits of intermediate-term price movements. It requires flexibility and time for analysis compared to intraday trading.
- Momentum Trading: Focus on shares moving in one direction. Short-term traders catch the wave of these trends, hoping to profit from the momentum carrying on before the trend reverses.
These methods reduce the tension of same-day trading.
Also Read: What is Swing Trading?
Most Effective Intraday Trading Indicators
Technical indicators are essential tools for traders. They help identify trends and shortlist stocks with strong momentum. Some of the most commonly used intraday trading indicators are:
Moving Averages (MA)
Relative Strength Index (RSI)
Bollinger Bands
MACD (Moving Average Convergence Divergence)
VWAP (Volume Weighted Average Price)
It’s not necessary to use all intraday trading indicators, as overanalysis can lead to decision paralysis. Traders should choose the indicators that align best with their trading style.
Popular Intraday Trading Strategies in 2025
| 1. Breakout Trading | Traders watch key support or resistance levels. A breakout beyond these levels, backed by volume, often signals the start of a strong move. Tip: Use volume confirmation to filter out false breakouts. |
| 2. Momentum Trading | Here, traders ride the wave of a strong trend, entering as momentum picks up. Indicator Tip: RSI and MACD help spot overbought or oversold conditions. |
| 3. Scalping | Scalpers make dozens (or even hundreds) of trades in a day, targeting small profits per trade. Timeframe: 1-minute to 5-minute charts. |
| 4. Reversal Trading | This strategy involves identifying potential reversal points based on candlestick patterns, divergence, or support/resistance zones. Use With Caution: Reversal trading requires experience and risk control. |
| 5. VWAP Strategy | VWAP helps identify whether the stock is trading above or below its average price. Institutions often use VWAP as a benchmark. Basic Rule: Buy when price is above VWAP, sell when it’s below. |
How is Intraday Trading Different from Regular (Delivery) Trading
| Feature | Intraday Trading | Regular (Delivery) Trading |
|---|---|---|
| Holding Period | Buy and sell within the same day, no overnight positions. | Hold shares for days, months, or years. |
| Purpose | Earn quick profits from small price changes during the day. | Build long-term wealth from share value growth and dividends. |
| Risk Level | High risk due to fast market movements. | Low risk in comparison to intraday but still depends on market trends. |
| Ownership of Shares | No actual delivery; trades are squared off the same day. | Shares are transferred to your Demat account. |
| Capital Requirement | Lower margin money is required; leverage is often used. | Full payment for shares is needed before delivery. |
Timeframe for Intraday Trading
The 15-minute and daily candlestick charts are among the most commonly used, though some traders prefer the 1-minute chart for quick entries and exits. There’s no one-size-fits-all approach—it depends entirely on your trading strategy and risk profile.
Common Intraday Time Frames:
1-Minute Chart: Best suited for scalping and ultra-short-term trades.
5-Minute Chart: Offers a balanced perspective, ideal for most intraday strategies.
15-Minute Chart: Helps identify trade setups and chart patterns effectively.
Hourly Chart: Useful for confirming the broader intraday trend.
Intraday Trading vs Delivery Trading
| Feature | Intraday Trading | Delivery Trading |
|---|---|---|
| Holding Period | Within a day | Days to years |
| Risk Level | High | Moderate to Low |
| Margin Requirement | Low (due to leverage) | High (full payment) |
| Analysis Type | Technical | Fundamental |
| Transaction Cost | Higher (frequent trades) | Lower |
Risks and Challenges
Intraday trading offers numerous opportunities but also requires quick decision-making. Prices can change suddenly because of volatility in the market or events across the globe, challenging traders to remain vigilant. Emotional pressures like fear or overconfidence test discipline, but overcoming them builds resilience. These trades need to close on the same day, planning becomes crucial. Through strategising, discipline and risk management, these difficulties turn into great lessons for traders.
Final Thoughts
Intraday trading offers immense potential but demands knowledge, discipline, and continuous learning. Whether you’re just starting or refining your strategies, focus on process over profits. Understand technical tools, follow a solid plan, and manage risks like a professional.
Remember: Consistency is more important than big wins. Patience, practice, and persistence will define your success in the world of intraday trading.
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FAQs on Intraday Trading
In intraday trading, you must square off your position before 3:15 PM on the same trading day. If you don’t close the position manually, your broker will automatically square it off after 3:15 PM.
Intraday trading demands continuous attention, quick decision-making, and real-time market monitoring. Therefore, it’s generally not suitable for individuals with full-time jobs or limited screen time during market hours.
No, fundamental analysis isn’t required for intraday trading. Intraday traders primarily depend on technical analysis tools such as candlestick patterns, moving averages, and momentum indicators to make trading decisions.
Liquidity is crucial in intraday trading. High liquidity ensures narrower bid-ask spreads and allows traders to enter and exit positions quickly without significant price impact. Low liquidity can lead to slippage and difficulty in executing trades efficiently.
Yes, you can convert an intraday position into a delivery trade, provided you do so before 3:15 PM. You’ll need to pay the full amount for the stock to take delivery and hold it beyond the trading day.
Regular trading, also called delivery trading, involves holding shares for more than a day in a Demat account. Intraday trading requires buying and selling on the same day without taking delivery, aiming to profit from short-term price fluctuations.
For day trading, choose highly liquid stocks with strong daily trading volumes and noticeable price movement. Focus on shares from major indices, watch market trends, follow news updates, and use technical analysis to spot good entry and exit points.
If you buy 100 shares of a company at 10:30 AM and sell them at 2:00 PM on the same day for a higher price, that’s an intraday trade, as the position is closed within the day.
Intraday indicators use historical price and volume data to forecast short-term market movements. They help traders spot trends, momentum shifts, and entry or exit signals, allowing faster decisions during volatile market hours for potential profit opportunities.