4 Key Benefits of Intraday Trading

Intraday trading is a necessity for professional traders and a lure for newbie traders and investors in the stock market. The advancement of the Internet has provided us with easy access to information like charts and technical analysis, leaving people to wrongly assume that it’s as easy as purchasing and selling in a normal stock trading scenario. The risks outweigh the benefits if done without understanding various market makers in intraday trading such as sentiments and technical indicators.

However, the scenario changes if you are an experienced trader with a finger on the pulse of market movements. While there is a significant risk involved with intraday trading, there are also advantages of intraday trading for such a trader.

What are the four benefits of intraday trading?

In trading parlance, intraday trading or day trading refers to when positions are opened and liquidated on the same day.

The four main intraday trading benefits are:

1. No Overnight Risk

   A noteworthy aspect of the stock market is the overnight risk. Overnight risk refers to when there is a risk that a stock’s price may decrease/increase the following day while you are still holding it in your trading or demat account.

   Since traders start the next day with no open positions, they eliminate the risk of overnight factors influencing their trade.

   In day trading, since the trader must terminate the position before the conclusion of the trading day, the profitability is guaranteed to be unaffected by any events or movements that occur during this time.

   Therefore, any stock market news, whether it is local or worldwide - such as after trading hours announcements or US markets in the evening, will not jeopardise your gains on that specific day.

2. Potential to Earn in Bear Market

   With the use of appropriate trading tactics, intraday trading can produce significant gains for traders.

   In a booming stock market, capital appreciation is simple to attain. However, intraday share traders utilise the short-selling strategy in unfavourable market circumstances to generate profits as well. This is the reason why serious traders use day trading to grow their capital and earnings are redirected to invest for the long term. Yet, intraday remains the base for most expert traders.

3. Quadruple Leverage

   Intraday traders frequently use leverage to boost their profits. In the stock market, a broker assesses your shareholding history and cash position before approving a margin amount. The amount of margin might range from four to 10 times the amount of cash in your trading account.

   High leverage will thus help increase the potential to earn more money, which is why it is one of the significant intraday benefits. You can start day trading with low capital as well, and take advantage of leverage if you are confident in your analysis.

4. Great Opportunity to Learn

   Intraday undoubtedly provides a valuable platform for learning, examining, and using numerous trading methods. You can experiment with the tactics to see which one works best for you. This is also an intraday trading advantages. It can be a good learning platform for newbie traders looking to have a quick learning curve in the stock market. Nothing teaches you like failures! It is important though to restrict your capital in the initial days of your day trading journey, so that you do not expose yourself to significant losses.

Conclusion

Although numerous benefits of intraday trading exist, newbies must proceed carefully and cautiously. Knowing your risk appetite, conducting the necessary research, and having the patience to see your trading plans through are essential for being a successful trader.

The trading adventure will go more smoothly if you have the backing of a professional broker with access to the correct information and cutting-edge charting tools.