How to Do Intraday Trading: A Detailed Overview
- Nimisha Panda
- Dec 3, 2025
- 9 min read
Introduction
Intraday trading offers a special chance to profit from a share's price changes inside a single day. Intraday trading is sometimes known as day trading, as the name implies. Intraday trading basically entails a trader taking a position in a stock for the duration of the day and speculating on whether the stock price will rise or fall. Leverage is a tool used by intraday traders to increase their possible return on investment by enabling them to invest more than their available cash. According to SEBI's intraday trading requirements, traders must square off their positions by the end of the day, or else their brokers will.
Table of Contents
What is Intraday Trading?
Operations that take place "within the day," particularly trading operations carried out by an individual during the market's operational hours, are referred to as intraday. Finding equities with the potential to rise or fall in value is the main goal of intraday trading. A trader buys a stock at a lower price and sells it at a higher price when they believe it will rise. On the other hand, short selling, which entails selling at a high price and repurchasing at a lower cost, is frequently used by traders who predict a drop in the value of a company. It is important to remember that intraday trading necessitates quick and well-informed decision-making by requiring a thorough awareness of anticipated market fluctuations.
How Does Intraday Trading Work?
Leveraging small price changes on highly liquid equities is how intraday trading operates. This is how it works:
Stock Selection: Traders choose highly liquid equities with notable daily price fluctuations.
Analysis and Strategy: Traders forecast the price movements of the chosen equities using a variety of trading techniques and technical analysis.
Trade Execution: Online trading platforms facilitate the speedy execution of trades. Within the same day, orders are issued to purchase stocks at low prices and sell them at high prices.
Monitoring and Modifications: Based on current data and information, traders constantly keep an eye on the market and modify their methods as needed.
By closing all bets before the market closes, intraday traders hope to profit from slight price fluctuations and minimise overnight market risks.
How to Do Intraday Trading?
Intraday trading requires careful planning and preparation because it might be dangerous. To begin trading intraday, follow these instructions.
Step 1: It is essential to comprehend the operation of financial markets. Learn about several asset classes, such as stocks, currency, and commodities, as well as market trends, volatility, and liquidity. In addition to learning how to analyse market data, you should keep up with financial news.
Step 2: Open a trading account with a trustworthy and respectable broker. Learn about the features of the trading platform. Recognise the commissions, fees, and other expenses related to intraday trading.
Step 3: Learn the fundamentals of technical analysis, which include examining past price charts and trends to spot possible trading opportunities. Recognise important technical indicators, including trend lines, moving averages, and levels of support and resistance.
Step 5: Following the establishment of a target buy and sell price for the company, you examine historical price trends and performance. After the order is placed, you use charts to closely monitor price movements and study their patterns.
Step 6: You can square off the position, basically, settle the trade, once your desired target price is reached. You cannot carry over your position in an intraday trade, and this will occur on the same market day.
Step 7: Create a trading strategy that fits your financial objectives and risk tolerance. Try out several tactics, such as scalping, breakout trading, and trend following, and back test them to see how they have performed in the past. To properly control risk, set precise take-profit and stop-loss levels. Increase your trading size gradually, starting with smaller positions. Improving your intraday trading abilities requires constant practice and learning.
Types of Intraday Trading
Scalping: A high-frequency trading technique is called scalping. In order to make money, traders usually hold positions for relatively brief periods of time—typically a few seconds to a few minutes—and rely on slight price changes.
Momentum Trading: The goal of momentum trading is to profit from robust price patterns based on market data and technical indicators. In order to enter trades in the direction of the trend, traders search for notable upward or downward momentum.
News Trading: Taking advantage of price changes brought on by news events is known as news trading. In order to enter trades based on their impact on the market, traders keep a constant eye on news releases, earnings reports, and economic statistics.
Range Trading: In range trading, traders choose securities based on a predetermined price range and profit from purchasing at the lower end of the range and selling at the upper end. To spot range-bound price fluctuations, traders use technical indicators like support and resistance levels.
Strategies for Effective Intraday Trading
Effective intraday trading requires a strategic approach, and the following approaches can help beginners and seasoned traders succeed:
Prioritize Liquidity: One of the main characteristics of intraday stocks is liquidity, since such a trade would not be feasible without it. Small and mid-cap companies' equity shares are highly volatile due to market swings and are easily acquired and sold. Analysing 52-week high and low values allows one to precisely determine whether to take long or short positions while investing; thus, it is important to pay close attention to the cyclical variations.
Consider Volatility: The best intraday stocks typically have price variations that range from medium to high. When engaging in intraday trading, market value swings of more than 3% should generally be avoided because there is a significant risk of losing money in the event of a negative downturn in an economy's stock market.
High Correlation: Buying an intraday share that has a strong association with a reputable stock exchange's benchmark index is desirable. Therefore, when the index value tends to vary, significant fluctuation in share prices might be seen. Benchmark indexes are made up of shares of leading companies that are listed on a stock market; thus, it is reasonable to anticipate that, absent any anomalies in the economy, they will fluctuate upward. Therefore, if this guideline is adhered to, intraday trading will result in significant capital appreciation.
Increased Trade Volume: To spot price changes, intraday investors might monitor the trade volume index of a specific security. Depending on the success of an underlying company, a greater trade volume index indicates either excessive supply or demand. In certain situations, both purchase and sale transactions can result in capital appreciation benefits.
Timely Entry and Exit: It is highly recommended to make trades that follow the current intraday trend. If the trend continues, this strategy offers chances for low-risk entry locations and substantial profit potential. Developing successful entry and stop-loss tactics requires an understanding of these trends. Achieving your desired profit or reaching the maximum loss barrier you are hesitant to surpass are two important factors to take into account when deciding whether to withdraw. It could be wise to move forward with your departure after you reach your target profit level.
Intraday Trading Tax Rules in India
Your winnings from intraday trading will be regarded as speculative business profits. Because you are trading without intending to take ownership or delivery of the contract, it is considered speculative. Short-term capital gains tax applies to intraday trading. Because of this, any earnings from intraday trading are regarded as short-term capital gains and are taxable at the proper rates. Remember that a person's taxable income includes short-term capital gains. Financial records and an ITR-3 report are necessary since intraday trading is regarded as company revenue. Intraday traders must file their income tax returns using the appropriate forms. This includes reporting capital gains, total trading income, and other relevant data. Make sure you appropriately disclose intraday trading income in order to comply with tax requirements.
Calculation of Tax on Intraday Trading Revenue
Step 1: Calculate Total Turnover: This is an essential stage in figuring out whether tax audit rules apply. It entails totalling all intraday transaction variances, both positive and negative.
Step 2: Determine Income from Speculative Businesses. Deduct trading-related costs, such as broking fees and transaction costs, from the total turnover in order to calculate speculative business income.
Step 3: Set Off Against Speculative Income: While net intraday trading profits can be set off against other speculative revenues, they cannot be subtracted from other types of income.
Step 4: Carry Forward Losses: By carrying forward net losses for four years and offsetting them against speculative earnings, they can be subtracted from future tax requirements in a later year.
Conclusion
One of the hardest methods to benefit from the stock market is through intraday trading. It calls for a great deal of patience, discipline, and experience. According to statistics, almost 90% of intraday stock market traders lose money. You can't use this get-rich-quick strategy to make huge riches overnight. Before advancing to the more complex ideas of day trading, novices must first grasp the fundamentals of intraday trading. Gain the necessary knowledge from reliable sources and apply what you've learnt to a demo account to comprehend intraday trading and the stock market. Nowadays, a lot of Indian brokers provide demo accounts.
Frequently Asked Questions
How does intraday trading work?
The trader either sells the stock and then buys it again the following day, or they buy and sell it on the same day. Intraday trading does not result in delivery because the net position at the end of the day is zero. Therefore, your Demat account is unaffected by intraday trading.
Are there any limits to intraday trading?
Yes, there are constraints. For example, brokers and regulatory agencies may set minimum margin requirements, and some stocks may be subject to limitations based on their volatility and liquidity.
What are the requirements for intraday trading?
A trading account, enough margin money, real-time market data access, and a strong trading platform are prerequisites.
What is the best time for intraday trading?
The optimum time to trade intraday, according to several experts, is between 10.15 AM and 2.30 PM. Morning volatility is best for intraday transactions because it usually decreases by 10.00 to 10.15 AM.
How to pick stocks for day trading?
You need to know how to choose stocks for intraday trading if you want to be a great day trader. When people don't select appropriate stocks to trade during the day, they often lose out. Selecting the right stocks to book gains is a skill that requires practice.
Is intraday trading profitable for traders?
Although intraday trading can be lucrative, there are a lot of risks involved. Knowledge of the market, trading strategy, and the capacity to react fast to changes in the market are all necessary for success.
How is regular trading different from Intraday trading?
There is only one distinction between an intraday trade and a regular trade. It can be found when taking deliveries of stock. In intraday trading, you square off your positions on the same day. Consequently, your buy order is cancelled by your sell order. In this way, ownership of shares is not transferred. It usually takes a few days or even weeks for a trade to settle. Consequently, the shares you bought are delivered to you, and the shares you sold are taken out of your Demat account.
Is intraday trading good for beginners?
Intraday trading is much riskier than long-term investing, especially for novice traders. However, it is possible to make money by gaining thorough knowledge and using suitable risk management strategies.
Is intraday trading safe?
Because of the significant swings in stock values that can happen in a single day, intraday trading includes inherent risks. It is crucial to create a solid strategy, use stop-loss orders to reduce possible losses, and avoid making judgements based solely on feelings in order to guarantee safety in this trading technique. Experienced traders may be able to handle these risks with ease, but novices could suffer significant losses.
Is stop loss important in intraday trading?
In intraday trading, stop-loss levels are essential because they protect your capital from large losses while exposing a small portion of your overall capital to danger with each trade.
How to start intraday trading as a beginner?
You need both a trading account and a demat account in order to start intraday trading. To reduce possible market risks, it is best to start with a small trade volume if you are thinking about intraday trading.
How is intraday trading income taxed in India?
Intraday trading revenue is classified as speculative business income in India and is taxed according to your income tax slab rate.
How can I calculate taxable income for intraday trading?
All trading-related expenses, including booking fees, transaction fees, and other relevant charges, should be deducted from your gross intraday trading gains. It assists you in figuring out your intraday trading taxable income. Your net income is added to your other sources of income to determine your taxes.
What is considered intraday trading for tax purposes?
Buying and selling stocks on the same day without waiting for delivery is known as intraday trading, which is classified as speculative transactions for tax purposes.
Is filing ITR for intraday trading mandatory?
If traders' intraday trading revenue exceeds the baseline exemption level, they must file an ITR.
How should I report intraday gains and losses in my ITR?
They should be shown under business revenue on your ITR. Use the appropriate ITR form (ITR-3 or ITR-4), which is utilised by people in business or the profession.
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