What are primary benefits of intraday trading?
Intraday trading, also known as day trading, refers to the trading of stocks and other securities within a single day. Here you buy and sell shares daily without having to resort to physical shares. It’s a specialised form of online share trading. This type of trading depends on price movement—your profit depends on the opening and closing prices of a share.
Intraday trading for beginners might seem too risky at first due to the fluctuating nature of the market. But with proper planning and the right trading tools, you can roll in handsome profits. What’s more? You can realise your profits much quicker here than in any other type of trading.
Top benefits of intraday trading
No overnight risks: Time plays a critical role in the financial world. The stocks you bought yesterday could plummet today. This situation is called the risk of overnight. But this risk factor is not present in day trading. As you close your position within a single trading day, your income for the day remains intact. So, you can always start afresh the next day without worrying about your portfolio.
Four-time higher leverage: This facility helps you to trade in a large number of shares even if you have a small trading capital. Professional traders use leverage to buy stocks of different companies while paying only a little of their margins. For instance, suppose you have a trading capital of Rs. 25,000. You can get a leverage of up to 1, 00,000 (4x of Rs.25,000). This high leverage gives you access to more shares and thus a boost to the possibility of successful trading.
Daily income: Intraday trading can be a source of regular income. Here the flow of income remains regular, unlike a salaried job where you get you paycheck only once a month. Day traders may need to refresh their strategies every other day to increase their earnings. Daily income is part of the allure of day trading. In fact, this type of trading is a good option for those who need a regular income.
Inexpensive to start: Launching a start-up is no small matter. It needs loads of money and effort. Despite your investment of time and money, it might take years to reach the break-even point. But day trading can fetch regular profits without a massive capital. You can start such trading with any amount that you are comfortable with. And you can start making profits from the very first day!
Make money fast: Intraday trading is the ideal way to make more money in the shortest possible time. However, as is the case with any venture, not everyone makes the cut. It requires a disciplined approach and a clear understanding of the stock market. Though day trading carries more risk than long-term trading, it promises greater rewards. Anyone looking for a serious income in a short time should opt for this type of trading.
Success in bad market conditions: As in life, there are fluctuations in the financial market. It’s not possible for a trader to continue to taste success forever through online share trading. But as a day trader, you can apply short-selling trading strategies to take advantage of falling stock prices. This ability to make money even in a bear market scenario is indeed an advantage for a skilled trader.
Last but not least
Intraday trading offers a number of benefits over long-term trading. It is important that you pick the right market and trading tools. Choosing a trading account with a brokerage firm like Kotak Securities can provide you with a plethora of research materials and live updates. However, figure out your priorities first. Trading with proper knowledge and a clear action plan is the key to becoming successful in this arena.