The stock market in India has attracted millions of investors and they have tried to make profits in different ways using their own strategies. Every investor has the skills to analyze market trends. If you can find a trend in a few hours then intraday trading may suit you best.

Intraday Trading Meaning

In the stock market, the intraday is a mode of trading, where traders track the market minute by minute to place orders to buy or sell stocks every day. They hold market positions only for a short time that cannot go beyond the trading session timings in a day. In case, a trader forgets to close the position, the trades will be executed automatically at the end of the trading session on the stock exchange. I

There are several factors attached to trading. Intraday trading has pros and cons as well. Let us check on the background to find out the pros and cons.

Pros of Intraday Trading

1.   Marginal trading

Intraday traders are allowed to buy shares on margin provided by the brokerage firms. Traders can leverage the capital to earn maximum profits. You need to pay only a part of the full price; therefore, you can earn more by investing less.

2.   Short Selling

This is an interesting advantage of intraday trading, if you feel the price of a stock may fall during the trading session, you are allowed to sell the shares without even buying them. You can place the order first and later, during the trading session, you can buy that particular stock at a lower price to book profit.

3.   Low brokerage and Expenses

Now, you can trade online using the online trading account and Demat account. Online trading has made intraday trading more convenient and less expensive. There is no stamp duty on share transfer. There are a few leading stockbrokers offering lower brokerage rates as well.

4.   Less Investment Amount

An online trading account allows to buy or sell even a single share on the stock exchange. There is no need to make huge investments in the stock market to start trading online. Start only with the amount that you can afford to lose.

5.   Take advantage of volatile market

Traders can gain more money when the stock market is more volatile but by trading in a strategized manner. You should use strategies like stop-loss and many more.

Cons of Intraday Trading

1.   Risky

You place frequent orders in intraday trading and expect quick profits but you may lose money faster than making profits. What if the stock you own, moves in the opposite direction than you anticipated and want to place orders accordingly and the hazard is that you can’t hold your stock for the next day otherwise your position will be trade-off automatically no matter what, and may have to book losses.

2.   Time-Consuming

You are required to monitor the stock market trends closely. You need to get updates and track stocks minute by minute that eventually consume a lot of your time.

3.   No Corporate Benefits

For intraday trading, the stocks need to be sold within a day. Thus, traders are deprived of dividends, bonuses, rights issues, etc offered to the stocks available in the Demat account.

4.   Technical Knowledge

Intraday traders must be clear about technical terms to be used in intraday trading. There are several technical terms to understand the trend, charts, orders, structures. It is necessary to put your own trades independently as an informed trader.

Thus, these are the advantages and disadvantages that a trader must consider and start intraday trading only after determining his risk profile.

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