How Exactly Does Intraday Trading Work? | Fortune Wealth Academy

How Exactly Does Intraday Trading Work? | Fortune Wealth Academy

Intraday trading — also known as day trading — is the practice of buying and selling stocks within the same trading day. The goal is to capitalize on short-term price movements in a stock, without actually taking delivery. For beginners, understanding the intraday trading process is essential before entering this high-risk, high-reward space.

In intraday trading, you open and close your position on the same day. Positions not squared off by market close (3:15 PM in India) are automatically squared off by the broker’s Risk Management System (RMS) — though traders are responsible for closing their own positions.

Example:
If you have ₹10,000 in your account, the broker may offer up to 8x leverage, letting you trade stocks worth ₹80,000. But this leverage is available only if the trade is marked as ‘Intraday’ while placing the order.

You must clearly select ‘Intraday’ or ‘MIS’ (Margin Intraday Square-off) while placing the order. This ensures that:

You get the higher leverage

The trade must be closed the same day

If the trade is not closed before market close, the broker’s RMS will attempt to square it off — but any resulting losses are still your responsibility.

Intraday traders can choose smart order types for better risk management:

Cover Order (CO): Includes a mandatory stop-loss while entering the position.

Bracket Order (BO): Includes both stop-loss and target price. Once one level is hit, the other gets auto-cancelled.

These orders protect your capital and automate profit booking or risk minimization.

If you buy intraday and don’t square off, the trade is treated as a delivery trade, requiring full funds.

If you sell intraday without holding shares in your demat account, the transaction can go to auction, leading to penalties and losses.

⚠️ Always close your intraday positions manually or ensure sufficient funds/shares.

At day-end, you’ll receive a contract note from your broker listing:

Buy and sell prices

Brokerage fees

STT, GST, stamp duty, turnover charges, etc.

Your real profit or loss is calculated after deducting all these charges — not just based on price difference.

Intraday trading requires:

Use of limit orders instead of market orders

Strict stop-loss settings

Regular profit booking

Continuous monitoring of price action and market news

Without proper discipline and risk control, losses can accumulate quickly.

Intraday trading is best suited for:

Traders who can watch the market actively

Those with strong technical analysis skills

Investors with high risk tolerance and discipline

While intraday offers quick opportunities, it also magnifies risks due to leverage. It is essential to educate yourself, use tools like stop-losses, and start small before increasing your exposure.