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How Intraday Trading Works? Detailed Ideas

Intraday trading in India has been gaining momentum of late. It is no longer the option of only trade pundits. There is enough information available today in the public domain to learn from and explore intraday trading.

Why choose Intraday Trading?

Simply put, intraday tradingor day trading involves buying and selling of securities and making profits from the price differentiation, within the same trading day. The reasons for you to engage in day trading are many:

  • Additional Income Source: In long-term trades, you cannot rely on the profits or investment earnings to supplement your existing income, but with intraday trading profits, you can. The former provides income benefits after a stipulated time period. In day trading, you earn profits within the same day, and it can be used as an additional support to your day job’s income.

  • Immediate Risk: As compared to regular trading, intraday trading has only immediate risk of the day. When you begin trading the next day, your position is back to square one, and the previous day trading risk will cease to exist.

Ideal Candidates in Day Trading

Before figuring out how intraday works, it is important to know who the prime participants in the intraday trading markets are. While you may have your own style of investing, there are specific characteristics that you must have to engage in day trading:

  • Risk: Since intraday trading involves transactions that get squared off within the same day, a certain level of risk-taking capacity is needed. In long-term trading, you are provided with a relatively longer timeline, hence losses may get compensated with the probable profits within the same time horizon. However, in intraday trading, you earn profits or losses within the same day, so if you are counting on a stock to give you profits and the market sentiment is otherwise, you will have to risk the investment.

  • Technical Know How: Technical analysis is a skillset which can benefit you in day trading. The ability to read market data, through chart patterns, movements and making use of it to place trades can come handy in intraday trading. You do not gain proficiency in technical analysis within days, and it takes years and years to perfect the art. However, it is an excellent skill to upgrade to.

  • Market Research: To successfully carry out intraday trading, you need to ensure that you are dedicating enough time towards studying the market. If you are already occupied by your day job for most hours of the day, you may not be able to time the market and make profits from day trading. To efficiently understand the market sentiment within a day’s time would require dedication and attention toward market monitoring.

Mechanics Behind Intraday Trading

As the name suggests, intraday trading involves transaction of securities within the same day, with the aim of earning profits. To understand how intraday works, you need to be aware of the following steps which can be explained through an example:

  • Step 1: You need to hold a demat account and an online trading platform to put across your trades. There are also brokerage charges involved in security transactions. It is, however, important to buy a brokerage plan best suited for your trade volumes in a day.

  • Step 2: Based on your knowledge and market research, you speculate that prices of stock X will rise today. You will buy a lot of that stock at price ‘A’ and wait for a couple of hours, timing the market, to see a potential rise in the stock prices.

  • Step 3: If your speculation holds true, the price of Stock X will increase to price “A+1”. Seeing an opportunity to earn profits, you will immediately put in a sale trade of your earlier purchased stock lot, and pocket your day profit.

  • Step 4: Please note, in intraday trading transactions, you have to specifically mention that you are placing an intraday trade. Almost all trading platforms have the functionality to automatically square off the specified intraday trading transactions automatically if they are not done manually by you.


If you see yourself falling under the bracket of an ideal candidate for intraday trading, wait no more! Intraday tradingworks in a simplistic manner, and the only ask is for you to gain enough skills to place trades correctly and earn profits through the market.

Disclaimer: ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.

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