Intraday trading — also known as day trading — is the practice of buying and selling stocks within the same trading day. The goal is to capitalize on short-term price movements in a stock, without actually taking delivery. For beginners, understanding the intraday trading process is essential before entering this high-risk, high-reward space.

What is Intraday Trading?

In intraday trading, you open and close your position on the same day. Positions not squared off by market close (3:15 PM in India) are automatically squared off by the broker’s Risk Management System (RMS) — though traders are responsible for closing their own positions.

Example:
If you have ₹10,000 in your account, the broker may offer up to 8x leverage, letting you trade stocks worth ₹80,000. But this leverage is available only if the trade is marked as ‘Intraday’ while placing the order.

5-Step Process for Intraday Trading

1. Mark Your Order as Intraday

You must clearly select ‘Intraday’ or ‘MIS’ (Margin Intraday Square-off) while placing the order. This ensures that:

  • You get the higher leverage

  • The trade must be closed the same day

If the trade is not closed before market close, the broker’s RMS will attempt to square it off — but any resulting losses are still your responsibility.

2. Use Cover Orders or Bracket Orders

Intraday traders can choose smart order types for better risk management:

  • Cover Order (CO): Includes a mandatory stop-loss while entering the position.

  • Bracket Order (BO): Includes both stop-loss and target price. Once one level is hit, the other gets auto-cancelled.

These orders protect your capital and automate profit booking or risk minimization.

3. Avoid Failure to Square Off

  • If you buy intraday and don’t square off, the trade is treated as a delivery trade, requiring full funds.

  • If you sell intraday without holding shares in your demat account, the transaction can go to auction, leading to penalties and losses.

⚠️ Always close your intraday positions manually or ensure sufficient funds/shares.

4. Review Contract Note & Costs

At day-end, you’ll receive a contract note from your broker listing:

  • Buy and sell prices

  • Brokerage fees

  • STT, GST, stamp duty, turnover charges, etc.

Your real profit or loss is calculated after deducting all these charges — not just based on price difference.

5. Discipline is Key

Intraday trading requires:

  • Use of limit orders instead of market orders

  • Strict stop-loss settings

  • Regular profit booking

  • Continuous monitoring of price action and market news

Without proper discipline and risk control, losses can accumulate quickly.

How Intraday Trading Differs from Delivery Trading

Aspect Intraday Trading Delivery Trading
Settlement Same day (buy/sell) T+1 or T+2 (as per exchange)
Demat Account Not needed for trading Mandatory for holding stocks
Capital Requirement Mandatory for holding stocks Full funds or shares required
Analysis Focus Technical charts, news, volume Fundamentals + technicals
Tax Treatment Speculative income Capital gains (short or long-term)
Risk High (due to volatility & leverage) Relatively lower

Final Thoughts

Intraday trading is best suited for:

  • Traders who can watch the market actively

  • Those with strong technical analysis skills

  • Investors with high risk tolerance and discipline

While intraday offers quick opportunities, it also magnifies risks due to leverage. It is essential to educate yourself, use tools like stop-losses, and start small before increasing your exposure.

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