Share Market Intraday Trading: A Complete Guide
Intraday trading is one of the most popular approaches to participating in the share market. It attracts traders who aim to take advantage of short-term price movements within a single trading day. Unlike long-term investing, intraday trading focuses on quick decisions, discipline, and market awareness. While it offers opportunities for fast gains, it also carries significant risks if done without proper understanding.
This blog explains the concept of intraday trading in a simple and general manner, covering how it works, key strategies, essential tools, risk management, and the mindset required to trade effectively.
What Is Intraday Trading?
Intraday trading refers to buying and selling shares on the same trading day. The goal is to profit from small price fluctuations that occur during market hours. All positions are closed before the market closes, and no trades are carried forward to the next day.
For example, a trader may buy a stock in the morning when prices appear low and sell it later in the day when prices rise. Similarly, a trader may sell first and buy later if prices fall. Since trades are short-term, intraday trading requires continuous monitoring of the market.
How Intraday Trading Works
Intraday trading is based on price movement, volume, and market trends. Traders analyze charts, patterns, and indicators to identify potential entry and exit points.
Key characteristics include:
Trades are executed within the same day
Profits are based on small price movements
Decisions are time-sensitive
Positions are squared off before market close
Because prices can move quickly, intraday traders rely on fast execution and clear strategies.
Why Do People Choose Intraday Trading?
Intraday trading attracts traders for several reasons:
1. Quick Opportunities
Traders do not need to wait months or years to see results. Opportunities can arise multiple times in a single day.
2. No Overnight Risk
Since positions are not held overnight, traders avoid risks caused by unexpected news or events outside market hours.
3. Learning Market Behavior
Intraday trading helps traders understand market psychology, price action, and volume behavior more closely.
4. Capital Efficiency
With proper planning, traders can participate with relatively smaller capital compared to long-term investing.
Intraday Trading vs Long-Term Investing
| Aspect | Intraday Trading | Long-Term Investing |
|---|---|---|
| Timeframe | Same day | Months or years |
| Objective | Small frequent profits | Wealth creation |
| Risk Level | High | Moderate to low |
| Market Monitoring | Continuous | Occasional |
| Emotional Pressure | High | Low |
Both approaches have their place, and the choice depends on an individual’s risk tolerance, time availability, and financial goals.
Essential Tools for Intraday Trading
To trade effectively, intraday traders rely on certain tools and techniques:
1. Price Charts
Charts show price movement over time. Commonly used time frames include 1-minute, 5-minute, and 15-minute charts.
2. Volume Analysis
Volume indicates the number of shares traded. High volume often confirms strong price movement.
3. Technical Indicators
Indicators help traders analyze trends and momentum. Some commonly used indicators include:
Moving averages
Relative strength measures
Momentum indicators
Volatility indicators
These tools are used together to improve decision-making.
Common Intraday Trading Strategies
There is no single “best” strategy. Traders often experiment and choose what suits their personality and risk tolerance.
1. Scalping
This strategy focuses on making multiple small profits throughout the day. Trades last for a few minutes, and precision is crucial.
2. Momentum Trading
Traders identify stocks that are moving strongly in one direction and trade along with the trend.
3. Breakout Trading
This involves trading when the price breaks above resistance or below support levels with strong volume.
4. Range Trading
When prices move within a fixed range, traders buy near support and sell near resistance.
Each strategy requires discipline and strict exit rules.
Importance of Timing in Intraday Trading
Timing plays a crucial role in intraday trading. Market behavior often changes during different parts of the trading day:
Opening session: High volatility and fast price movement
Mid-session: Relatively stable and slow movement
Closing session: Increased activity as traders close positions
Understanding these phases helps traders avoid unnecessary risks.
Risk Management in Intraday Trading
Risk management is the backbone of successful intraday trading. Without it, even a few bad trades can wipe out profits.
1. Stop-Loss
A stop-loss limits losses by automatically exiting a trade when the price moves against expectations.
2. Position Sizing
Traders should risk only a small portion of their capital on each trade.
3. Risk-Reward Ratio
A favorable risk-reward ratio ensures that potential profits are higher than potential losses.
4. Avoid Overtrading
Too many trades often lead to emotional decisions and higher losses.
Psychological Aspects of Intraday Trading
Intraday trading is not just about charts and numbers; psychology plays a major role.
Common Emotional Challenges:
Fear of loss
Greed for quick profits
Impatience
Overconfidence after wins
Successful traders learn to control emotions and follow their trading plan consistently.
Common Mistakes Made by Beginners
Many beginners face losses due to avoidable mistakes:
Trading without a plan
Ignoring stop-loss rules
Chasing fast-moving stocks
Relying on tips or rumors
Trading with borrowed money
Avoiding these mistakes improves long-term survival in the market.
Developing a Trading Plan
A trading plan acts as a roadmap for intraday traders. It should include:
Entry and exit rules
Risk limits per trade
Daily profit and loss limits
Preferred trading strategy
Review process
Sticking to a plan reduces emotional decision-making.
Practice and Learning Curve
Intraday trading requires continuous learning and practice. Beginners should focus on:
Understanding basic market concepts
Practicing with simulated trades
Reviewing past trades
Gradually increasing trade size
Experience plays a major role in improving performance.
Is Intraday Trading Suitable for Everyone?
Intraday trading is not suitable for everyone. It requires:
Time to monitor markets
Emotional discipline
Ability to handle losses
Willingness to learn continuously
People who prefer a calm and long-term approach may find investing more suitable.
Final Thoughts
Intraday trading in the share market offers exciting opportunities but comes with equally high risks. Success depends not on luck, but on preparation, discipline, and consistency. Traders who focus on learning, managing risk, and controlling emotions stand a better chance of long-term survival.
Rather than aiming for quick riches, intraday traders should aim for steady improvement and realistic expectations. With patience and practice, intraday trading can become a structured and informed activity rather than a gamble.