What Is Intraday Trading?
Intraday trading (also called day trading) refers to the practice of buying and selling the same stock within the same trading session — all positions must be squared off before market close at 3:30 PM IST. No delivery of shares takes place; the net profit or loss is simply credited or debited to your trading account.
On NSE and BSE, intraday traders use higher leverage (provided by brokers as MIS — Margin Intraday Square-off product), allowing them to take larger positions with less capital.
How Intraday Trading Works on NSE/BSE
- Market hours: 9:15 AM to 3:30 PM IST (normal session)
- Mark position as MIS: When placing an order, select MIS (intraday) instead of CNC (delivery)
- Auto-square-off: If you don't close your position by ~3:20 PM, your broker's RMS (Risk Management System) will auto-square it off
- Settlement: Net P&L settled in T+1; no shares move to/from your Demat account
Intraday Leverage (Margin)
Brokers provide intraday leverage through the Margin Intraday Square-off (MIS) product:
| Broker | Typical MIS Leverage |
|---|---|
| Zerodha | Up to 5x on equity intraday |
| Angel One | Up to 5x |
| ICICI Direct | Up to 4x |
Example: With ₹50,000 capital and 5x leverage, you can take a position worth ₹2,50,000. A 1% move = ₹2,500 gain (5% return on capital). But a 1% adverse move = ₹2,500 loss (5% loss on capital).
⚠️ Leverage amplifies both gains and losses equally.
Tax Treatment of Intraday Trading
Intraday equity profits are classified as speculative business income under Section 43(5) of the Income Tax Act — not capital gains:
- Tax rate: Taxed at your applicable income tax slab rate
- Loss treatment: Speculative losses can only be set off against speculative gains (not capital gains)
- Carry-forward: Speculative losses can be carried forward for 4 years (vs. 8 years for capital losses)
- ITR filing: Must file ITR-3 (business income) not ITR-2
Key Intraday Strategies Used in India
1. Breakout Trading
Buy when a stock breaks above a key resistance with high volume. Popular with Nifty 50 stocks at opening.
2. Momentum Scalping
Ride strong momentum moves, taking quick 0.3–0.5% profits on liquid large-cap stocks.
3. VWAP Strategy
Enter long positions when price pulls back to the VWAP (Volume Weighted Average Price) in an uptrend.
4. Gap and Go
Trade stocks that gap up/down at open due to overnight news, expecting continuation in the gap direction.
Risks of Intraday Trading
- Forced auto-square-off: Broker closes your position at potentially bad prices if you miss the deadline
- Leverage amplification: Small adverse moves create disproportionate losses
- High brokerage: More frequent trading = more brokerage and STT costs eating into returns
- Emotionally taxing: Constant monitoring required; psychological discipline is paramount
- Low success rate: Studies suggest 70–90% of retail intraday traders lose money consistently
FAQ
Q: Do I need a large amount of money to start intraday trading? A: No minimum is mandated, but practically you need at least ₹10,000–25,000 to trade meaningfully after accounting for brokerage, margins, and having enough capital to withstand short-term losses.
Q: Can I do intraday trading without a Demat account? A: Technically yes — since no delivery happens, the Demat account is not used for intraday trades. But most brokers require a Demat account as part of the account opening process.
Q: What is the best time for intraday trading in India? A: The first 30 minutes (9:15–9:45 AM) and the last 30 minutes (3:00–3:30 PM) are the most volatile and offer the best intraday opportunities. The middle session (11 AM–2 PM) is typically quieter.
Disclaimer
This content is for educational and informational purposes only and does not constitute SEBI-registered investment advice. Always consult a qualified financial advisor before making investment decisions. Past performance is not indicative of future results.