What is Intraday Trading? Risks and Rules for Indian Traders

Intraday trading (also called day trading) is the practice of buying and selling stocks within the same trading day — all positions are squared off (closed) before the market closes at 3:30 PM. The goal is to profit from short-term price movements within a single session, without taking overnight delivery of shares. Intraday traders do not pay the full value of shares; instead, brokers offer leverage (margin) to amplify position sizes.

How Intraday Trading Works in India

To place an intraday order, you select 'Intraday' or 'MIS' (Margin Intraday Square-off) product type in your trading platform instead of 'Delivery' or 'CNC'. Most brokers offer 3x to 5x leverage on intraday positions, meaning you can trade shares worth ₹50,000 with just ₹10,000 in your account. If you do not square off your intraday positions before 3:15–3:20 PM, your broker will auto-square them off, often at less favourable prices.

Risks Every Intraday Trader Must Understand

Intraday trading is one of the riskiest forms of investing. According to SEBI data, the majority of individual intraday traders in India lose money. Leverage amplifies both profits and losses — a 2% adverse move on a 5x leveraged position causes a 10% loss on your capital. Transaction costs (brokerage, STT, exchange charges) add up significantly for frequent traders. Emotional discipline and a clear stop-loss strategy are essential.

Key Points About Intraday Trading

• All intraday positions must be closed before the market closes (auto-square off around 3:15–3:20 PM).
• Brokers offer leverage (margin) for intraday — typically 3x to 5x on equity.
• Intraday traders pay Securities Transaction Tax (STT) at 0.025% on the sell side.
• SEBI data shows the majority of intraday traders consistently lose money over the long term.
• Stop-loss orders are critical in intraday trading to limit potential losses.