Intraday trading in India- Definition, Procedure, Tips & Benefits
Jun 8, 2020

Intraday trading in India- Definition, Procedure, Tips & Benefits

Investors often wish to earn profit through trading in stocks within a short duration. They buy and sell equities within the same trading day. This mode of investing experience is known as intraday trading in India. Here traders keep a close watch on the daily movement of stock indices and utilise the fluctuation in prices to earn a profit.

Similar to all other investment schemes, you require a Demat account to undertake intraday trading. It is a risky procedure, especially for beginners. However, if you cannot invest funds for a prolonged period, then intraday can be an influential money-making tool. You just need to conduct ample market research and study the indicators to go ahead with the process. If you are still confused, then you can go through the tutorial to gain detailed knowledge about intraday trading meaning, procedure, and benefits.

How to do intraday trading in India?

Investors need to follow a disciplined approach and capture the favourable price movements to earn profits during intraday trading of stocks. Now, when the question arises, ‘How to make money in intraday trading?’ then you need to keep in mind the following intraday trading rules to be successful in the process.

Making money in the rising market

You can make money through intraday trading in both the rising and falling market by following the best indicator for intraday trading. However, you must not act too greedy in the process. When the stock pricing is rising, learn to sell the shares as soon as the price movement starts picking up. For example, you buy CEAT tyres shares at a price tag of Rs 900 in the morning, and by midday, it reaches Rs 920. You should sell it at this point to make a profit of Rs 20 utilising the intraday trading formula. Do not wait for the equity to cross the Rs 950 mark before selling them. It may not happen in the day, and may even start dropping by the afternoon. Ultimately your loss your money, if you solely practise intraday trading.

Making money in the falling market

It is also possible to practise intraday trading techniques and earn a profit when the share price of a company is following a downward trend. Suppose, experts, forecast that the Exide stock price will fall on a given day (due to some unavoidable consequences in the company). You can sell your equities in the morning at a pricing of Rs 170 per stock. At the closing of the trading hours, you can buy the same shares at Rs 160, and thus you make Rs 10 profit in the falling market. This practice is also known as ‘shorting of stock’. In the present COVID-19 uncertainties, investors are shorting their stocks and earning a considerable amount of money every day. So, selecting the best time frame for intraday trading is crucial for the success of this phenomenon. You may also opt for a free online intraday trading course in India to become a pro.

How to select stocks for intraday trading?

You can invest in various segments in intraday trading, including equities, currencies, commodities, and equity derivatives. It is better to invest in highly liquid shares, experiencing continuous trades throughout the day. They always have a ready list of buyers and sellers, generating profit for intraday investors.

Trading in currency derivatives is possible in the NSE (National Stock Exchange), BSE (Bombay Stock Exchange), and MSE (Metropolitan Stock Exchange) from 9 am to 5 pm. Rupee-Dollar (INR-USD), Rupee-Euro (INR-EUR), Rupee-Pound (INR-GBP), and Rupee-Yen (INR-JPY) are the conventional currencies traded in these markets. Commodity intraday trading for metals (gold and silver), agro-based products (coffee, sugar, cocoa, and wheat), and energy products (oil and gases) also have a considerable interest among investors. Agriculture based commodity markets remain open from 9 am to 5 pm, while other stuff can be traded between 9 am to 11:30 pm.

Which are the best intraday trading apps in India?

Multiple mobile apps using the best intraday trading software in India render their service to investors. Have a look at some of the trusted platforms used regularly by thousands of traders. Please find below the list of top intraday demat accounts in India along with intraday trading charges.

Demat Accounts Intraday Charges
SBI Demat Account More than 0.15 per cent or 5 paise per share
HDFC Demat Account A minimum of 0.10 per cent or Rs 25 paise per share to a maximum of 2.5 per cent of the transactional value
ICICI Demat Account 0.275 per cent for I-Secure Plan, 0.25 to 0.75 for I-Saver Plan, and 0.25 per cent for Prime Plan
Zerodha Demat Account 0.03 or Rs 20 for every transaction (whichever is lower)
Kotak Demat Account 0.049 per cent of the transactional value
Sharekhan Demat Account 0.10 per cent in the Classic Plan
Angel Broking Demat Account Rs 20 per transaction
5paisa Demat Account Rs 20 per transaction
Upstox Demat Account Rs 20 per transaction or 0.01 in Basic Plan (whichever is lower). Rs 30 or 0.05 per transaction in the Pro Plan.
Trade Smart Demat Account Rs 15 per transaction in the Power Plan and 0.07 per cent in the value Plan
Motilal Oswal Demat Account In the Default Pack, it is 0.05 per cent on the transactional value
India Infoline Demat Account 0.05 per cent per transaction on both sides

What are the benefits of intraday trading?

If you have in-depth knowledge about fluctuations of stock prices in the share market and do not have adequate funds for long-term investments, then intraday trading can be a useful profit-earning tool. Let us have a look at the top benefits of intraday trading in India.

Avoiding Overnight Risk

In share trading, the overnight risk is a crucial investment factor. It denotes to the change in the valuation of stocks in the next day. There are chances of the prices going down considerably when the market opens on the following day. This risk gets nullified when you invest predominantly through intraday. Here traders do not have to worry about the stock prices on the next day.

Daily Income

Intraday trading can be a substantial source of daily income for many investors. If you are well aware of the technicalities of the market, then you can even earn more than salaried jobs through this method. Moreover, Demat account holders can carry out this investment from the comfort of their home.

What is the income tax on intraday trading profit in India?

Any trade that you buy/sell on the same trading day will count as Intraday trading. The gains you make under this trade will be classed as a speculative activity. As per Section 43 (5) of the Income Tax Act, such profits will be added to your other income. It will be taxed in line with your income tax slab.

What are the best intraday trading tips in India?

If you are looking for the best intraday trading strategies to make sufficient profit daily, then consider these tried and tested approaches:

Select Two to Three Liquid Shares

Intraday investments require closing open positions in the same trading session. So, it is better to select two or three large-cap shares with high liquidity to maximise the chances of earning profit. You if trade in mid-size or small-caps stocks, then you may not gain sufficient profit as they have low trading volumes.

Designate Entry and Target Prices

Before you start investing in intraday, do not forget to determine entry-level and target price. Often traders sell their stocks as soon as they observe a nominal price hike. In this way, they miss the opportunity of earning higher returns. So, staying true to your designated entry and target price can help you maximise your earning capabilities.

Make Use of Stop Loss for Lower Impact

In the share market, stop loss acts as a trigger to automatically sell stocks when they fall below a specific price range. It helps in arresting enormous losses for investors. Practise short-selling to reduce the impact of damages, in case the share price rises considerably.

Sell Stocks when You Reach Target

It is common for traders to suffer either from greed or fear. While one group of investors tend to sell shares even before achieving the target, the other fails to book profit even after attaining the designated pricing. In both these cases, there is a high probability of making losses.

Determine Your Wish List Selectively

Every trader has a list of eight to ten shares about which they had conducted in-depth research. Try to gain knowledge about the technicalities of these companies, along with mergers, stock splits, dividend payments, and bonus dates. These data help in determining your target effectively.

Follow the Market Trend

Experts advise young investors to follow the market trend and trade accordingly. Even knowledgeable and experienced market guides with advanced tools find it challenging at times to predict market movements. You may often experience a bear market, despite technicalities supporting a bull market. So, use advanced tools only as an indication. If the exchange does not keep up to your expectations, then act accordingly by exiting your position.

Frequently Asked Questions

1. What is the highest margin for intraday trading?

Intraday trading is a very competitive segment amongst all investment schemes. If you have detailed knowledge about the market and can utilise advanced tools for predicting the market movement, then you can earn up to 10 to 30 times of your transaction during intraday trading through top-rated brokers, including Zerodha, Upxtox, 5Paisa, and Trade Smart Online.

2. How to earn money in intraday trading?

In intraday trading, investors buy and sell equities within the same trading day. Here, you need to keep a close watch on the daily movement of stock indices with the help of indicators and utilise the fluctuation in prices to earn a profit.

3. What is an intraday limit?

The maximum price movement, which is permitted by the rules and regulations of a specific stock exchange during intraday trading, is known as an intraday limit.

4. Can I buy 10000 shares in intraday trading?

Yes, you can buy 10000 shares in intraday trading as there are no restrictions on the number of purchases.

5. What is better intraday or delivery?

If you do not have an adequate fund for long-term investment and want to earn profit within a short interval of time; then intraday is better. However, it requires in-depth knowledge about the daily movement of stock indices and fluctuation of prices. On the contrary, if you are a beginner in the share market, and is in no hurry of earning a quick profit, then delivery trading is better.

6. Can I convert intraday to delivery?

Yes, it is possible to change intraday trading to delivery investment. You need to change the settings in your Demat account from intraday to delivery to opt for this transition. However, if you miss doing so, all intraday shares will get automatically squared off at 3.10 pm when the day-trading closes in India.

7. How can I make a consistent profit using intraday trading?

If you are an experienced investor and have a strong foundation about the daily movement of stock indices and intraday indicators, then you can utilise the daily price fluctuations to earn profit consistently through intraday trading.

8. How is intraday trading different from regular trading?

In intraday trading, you buy and sell equities within the same trading day. Here you cannot hold stocks, as they get squared off automatically at the end of the trading session. However, in regular trading, you can hold equities for years in your account. Iconic investor, Warren Buffett picked up shares and kept them in his ledger for as long as 25 years.

9. Who should participate in intraday trading?

Experienced and skilled investors having a strong foundation about the daily movement of stock indices and daily price fluctuations should participate in intraday trading. Beginners should limit their investment portfolios within delivery trading to minimise the chances of losses.

10. What is the best time for intraday trading?

The ideal time for intraday trading is between 9:30 am to 10:30 am, when the market is most volatile offering ample opportunity to earn a profit. In this time-frame, there is large-scale trading of liquid stocks. After 11 am, market movement usually becomes slow.

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