WHAT IS INTRADAY TRADING?

Introduction

Intraday trading refers to the process of buying and selling financial securities such as stocks within the same trading session. This type of trading is short-term, meaning positions are opened and closed on the same day. Unlike long-term investing, where positions are held for months or years, intraday trading focuses on quick gains based on short-term market movements. Traders use various strategies to capitalize on market volatility to generate profits quickly.

Advantages of Intraday Trading:-

1. Lower Capital Requirement: Intraday traders can participate in margin trading, which means they can trade larger positions with a smaller amount of capital.
2. Quick Profit Potential: Market volatility creates opportunities to make significant profits within a single trading session.
3. Immediate Withdrawal: Since positions are closed the same day, traders can withdraw their money immediately without waiting for the settlement period, unlike delivery trading.
4. More Trading Opportunities: Freed-up capital allows traders to engage in multiple trades within the same day, increasing potential opportunities.
5. Leverage Trading: Intraday trading allows the use of leverage, depending on the broker's margin policy. This can multiply potential profits but also increase risk.

Disadvantages of Intraday Trading:-

1. High Risk of Losses: Quick trades can lead to hasty decisions, increasing the likelihood of errors. With higher profit potential comes the risk of faster losses if the market moves unfavorably.
2. Market Volatility: Volatile market conditions can be unpredictable, leading to both big wins and significant losses in a short period.
3. Impact on Psychology: Frequent losses or bad trading days can have a negative psychological impact, leading to stress and affecting mental well-being.
4. Health Impact: Intraday trading can be stressful, especially when traders experience financial losses.

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