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Know The Advantages And Disadvantages of Intraday Trading

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Anubhav Rai
Know The Advantages And Disadvantages of Intraday Trading

Different types of trading approaches have different features and upsides and downsides, such as intraday trading and delivery trading. Trades are conducted according to various strategies, and a trader uses these strategies based on a variety of factors, such as his knowledge of the market, requirements, risk appetite, etc. He must then decide between intraday trading and delivery based on these factors. 


Intraday Trading


It involves buying and selling stock within the same day, i.e., before the market closes. Intraday traders aim to earn profits, but the most important thing here is to square off their positions before the market closes, regardless of how their stocks perform.

Before deciding between intraday vs delivery trading, let's take a close look at their pros and cons.


Advantages of Intraday Trading


  • Margin Facility


You can trade intraday with more than your capital by using a margin facility. Brokers will fund a trader's deficit when he or she buys stocks worth more than their capital.

Traders can now buy stocks they were previously unable to afford by taking advantage of this facility. By leveraging his position, he has the opportunity to increase his profits.


  • Taking no risks overnight


Traders who engage in intraday trading can rest assured that their stock price won't be affected by overnight news because all transactions must be settled within a single day.

Trading in this manner allows traders to book profits quickly from price fluctuations because capital is only tied up for a few hours.


  •  Learning


It is possible to do intraday trading with less capital as well, so if you are a beginner, then Intraday trading is the best way to learn the tricks and trades of Intraday trading and gain practical experience.


  •  Benefit from short-term market volatility


You may be able to book profits in a short period of time if you are an experienced trader and use Intraday trading strategies. If you aren't an experienced trader, you may not be able to use these strategies.


Note-If you want to know how to make money in intraday trading, read our article.


Disadvantages of Intraday trading


  • Riskier proposition


There is less time to settle your positions profitably when the stock market fluctuates extremely quickly. Intraday transactions have to be settled before the market closes, so you do not have as much time to settle your positions.

You may incur losses during the day if the market is against you throughout the day, which could get severe if your exposure is high.


  •  Requires Constant Tracking


Intraday trading requires constant monitoring and tracking of your stocks. To follow the price movements of stocks in intraday trading, you must choose a limited number of stocks and track them continuously.


  • Volatility


As a result of the higher volatility of 5-minute or 30-minute charts compared to monthly charts, trading on long-term charts is easier.



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Anubhav Rai
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