Intraday Trading
A trading style where every position — long or short — is opened and closed within the same market session, eliminating overnight gap risk entirely.
Definition
Intraday trading (also called day trading) is a trading style in which all buy and sell transactions are executed and settled within the same market session — 9:15 AM to 3:30 PM IST on NSE and BSE — with no positions carried overnight. Traders may go long (buy first, sell later) or short (sell first, buy later) within the session, profiting from intraday price movements in equities, equity futures, currency futures, or commodity futures on MCX. On NSE, intraday equity orders are typically placed as MIS (Margin Intraday Square-off) orders, which brokers automatically close before market end if the trader does not. Intraday trading encompasses a range of sub-styles including scalping (holding seconds to minutes) and short-term momentum trades (holding hours).
Why it matters
Intraday trading is the dominant activity by trade count on NSE and BSE. Its appeal lies in two structural features: the availability of enhanced leverage through intraday margin products, and the elimination of overnight risk (gap-ups and gap-downs caused by after-hours news). Because positions are closed each day, capital is recycled daily and profits — or losses — are crystallised every evening, making performance tracking straightforward.
However, intraday trading also concentrates risk. The same leverage that amplifies gains amplifies losses, and slippage, brokerage, and STT accumulate quickly with frequent trading. SEBI's peak margin framework, introduced in 2020–21, significantly tightened the leverage available to intraday equity traders, requiring brokers to collect a minimum percentage of peak margin intraday rather than simply end-of-day. This reduced the extreme leverage previously available and has made disciplined position sizing even more important.
How it works
An intraday trader selects liquid instruments — Nifty or Bank Nifty futures, heavily traded mid-caps, or front-month F&O contracts — where bid-ask spreads are narrow and execution is reliable. They define a daily loss limit and a maximum number of positions before the session begins. Entry signals are typically derived from short-duration charts (1-minute to 15-minute candles), with tools like VWAP, Supertrend, or support and resistance levels providing structure. Every trade carries a pre-defined stop-loss and target, and the trader exits at whichever is hit first. All positions are manually closed by 3:15 PM at the latest to avoid broker auto-square-off charges.
Example
Suppose a trader allocates Rs 5 lakh for intraday trading in Nifty 50 futures. With an SPAN plus exposure margin requirement of roughly Rs 1.2 lakh per lot, they can comfortably hold one lot at a time with buffer. At 10:00 AM, Nifty is trending above its VWAP at 23,680. The trader spots a bullish flag on the 5-minute chart and enters long at 23,690, placing a stop at 23,660 (30 points risk, Rs 1,500 per lot) and a target at 23,750 (60 points, Rs 3,000 per lot). The target is hit by 11:30 AM and the position is closed. The trader takes no further trades that day, having hit their daily target early, and closes out at 3:20 PM with no open exposure.
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