Intraday Trading
What is Intraday Trading?
Intraday trading refers to buying and selling financial instruments like stocks within the same trading day. The goal is to profit from price fluctuations during market hours. In intraday trading, positions are squared off by the end of the day, meaning no stocks are held overnight. This trading approach is common in the stock market, where traders seek to capitalize on short-term price movements.
How to do Intraday Trading?
To begin intraday trading, follow these steps:
- Open a Trading Account: You need a Demat and trading account with a brokerage.
- Select Stocks: Choose liquid stocks with sufficient trading volume to ensure easy entry and exit.
- Monitor the Market: Track stock price movements and use technical analysis tools like charts and indicators.
- Place Orders: Carry out buy and sell transactions during the same trading session.
- Manage Risk: Implement stop-loss levels to limit potential losses.
Tax on Intraday Trading in India
Intraday trading is considered speculative in India for tax purposes. The gains made from intraday trades are classified as speculative income and are subject to taxation under short-term capital gains (STCG). As per current regulations, this income is added to your total income and taxed as per your applicable income tax slab.
Intraday Trading Strategies
- Momentum Trading: Buy stocks that are moving in a particular direction with strong momentum.
- Scalping: Make small, frequent trades to take advantage of minute price changes.
- Breakout Trading: Trade when the price breaks above or below key resistance or support levels.
- Reversal Trading: Identify points where the stock price is likely to reverse its current trend.
