What is intraday trading? How does it work?
Intraday trading means buying and selling the same stock within a single trading session, closing the position before the market ends, with no shares actually held overnight. You're aiming to profit from short-term price movement during the session itself, entering when a setup matches your strategy and exiting at a target or a stop-loss before the closing bell.
Must intraday positions be closed the same day?
Yes. If you don't manually close an intraday position before the session ends, most brokers automatically square it off shortly before market close, typically converting it to a market order that executes at whatever price is available at that point, not necessarily a price you'd have chosen yourself. Relying on auto square-off rather than closing your own positions deliberately is generally worth avoiding, since you lose control over your actual exit price.
Intraday vs delivery trading?
| Intraday | Delivery | |
|---|---|---|
| Holding period | Closed same day, no overnight position | Held for any duration, shares actually credited to your demat account |
| Leverage | Often available, amplifying both gains and losses | Typically requires full payment upfront, no leverage |
| STT (Securities Transaction Tax) | Applies only on the sell side, at a lower rate | Applies on both buy and sell |
| Goal | Profit from short-term price movement within the session | Ownership, whether for trading over days/weeks or long-term investing |
The core distinction is simple, intraday never actually takes delivery of shares, delivery trading does. Everything else, leverage availability, cost structure, strategy, follows from that one difference.
What is liquidity? How do traders choose liquid stocks for intraday trading?
Liquidity refers to how easily a stock can be bought or sold without significantly moving its price, reflected in tight bid-ask spreads and high trading volume. For intraday trading specifically, liquidity matters more than almost anything else, since you need to enter and exit quickly, often multiple times a session, without your own order size moving the price against you.
Look for stocks with consistently high daily volume and a tight spread between the best buy and sell price as your starting filter. A companion guide on this site covers liquidity and market microstructure in much more depth, worth reading if you want the full mechanics behind why this matters.
What are stop losses?
A stop-loss is an order that automatically closes your position once price reaches a level you've set in advance, capping how much a single trade can lose. For intraday trading specifically, a stop-loss isn't optional, given how quickly positions can move within a single session, especially with leverage involved, trading without one turns a planned, limited loss into an unplanned, potentially much larger one.
Which costs affect intraday trades?
Brokerage, charged per trade by your broker, varies by broker and plan. STT applies only on the sell side for intraday trades, at a lower rate than delivery trading, where it applies on both buy and sell, a distinction worth knowing since it directly affects your cost comparison between the two approaches. Exchange transaction charges, stamp duty, and GST on brokerage all apply too, regardless of broker, set by the exchange or government.
These costs apply on every trade, win or lose, and they compound quickly with intraday's higher trade frequency compared to delivery investing, worth factoring into whether a strategy is actually profitable after costs, not just before them.
Why is leverage risky?
Leverage lets you control a larger position with less of your own capital, amplifying both gains and losses proportionally. A price move that would be a manageable loss without leverage becomes a significantly larger one with it, and losses can, in some cases, exceed your initial margin if the move is severe enough.
Leverage doesn't create risk from nothing, it amplifies whatever risk was already in the trade, which is exactly why position sizing and stop-losses matter more, not less, once leverage is involved.
What risk rules should beginners use for day trading?
Start with the fundamentals: risk a fixed, small percentage of capital per trade, commonly 1% to 2%, use a stop-loss on every position, decided before you enter, and set a maximum daily loss limit you actually stop trading at once you hit it. A dedicated companion guide on this site covers day trading risk management in full depth, worth reading in full before trading with real capital.
Want to go deeper?
This page covers the foundation. Dedicated guides on this site go further into specific parts of this journey: a full step-by-step beginner workflow for starting day trading, in-depth risk management rules and the common heuristics traders actually use, an honest look at whether day trading is worth learning at all given real success rates, and the actual income math behind common daily profit targets.
Practising intraday mechanics, order placement, stop-loss discipline, position sizing, with virtual money is a lot cheaper than learning them with real capital on the line. Neostox's paper trading runs on live NSE and BSE market conditions across equities, futures, and options, a solid place to build these habits before your first real intraday trade.