What is the difference between interday trading and intraday trading

Posted: Maryon On: 10.06.2017

If you invest in share markets, then you would have most likely heard of Warren Buffett, the greatest investor of all time. Some of the shares in Warren Buffett's portfolio were picked up almost years ago. For those who are not interested in long term investing or more specifically delivery trading, there is an alternative in the form of intra-day trading waiting for them. And this is a place where thousands of small investors try to make a fortune every day, by tracking minute by minute change in share prices.

You can trade in two different ways in share markets. You can either do intraday trading or you can opt for delivery based trading investment. Intraday trading is typically completed within a day — this means that you have to sell the shares that you have purchased on that day before the closing of markets.

On the other hand, in delivery based investments, you are not required to buy and sell shares within a day and you can hold them for as long as you want.

There are quite a few advantages of Intraday Trading, the biggest one being that you are allowed to buy shares without paying the full price of the shares Paying only the margin money. The market makers allow you pay only a part of the price to hold the shares.

So, you can gain more by investing less. But this means that your losses would be higher as well. Intraday trading also allows you to short sell the shares — selling shares even before buying them but buying before market closes. This is one benefit that can give you profit even when the price of the share is sure to fall.

One of the biggest disadvantages of intraday trading is the time frame. No matter how confident you are, you have to sell the shares within a day.

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So, if the share loses price, you are sure to lose money too. You also do not get the benefits of long term investment like dividends, bonuses etc.

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Another negative aspect of intraday trading is that it can become quite stressful as you need to monitor the markets continuously. Unfortunately, the lure of quick money sucks in investors who should ideally stay away from intraday trading. Intraday traders buy shares for just few minutes or hours whereas delivery traders might buy for months or years.

Intraday

Now if you, as an intraday trader can judge the mood of share prices at regular, small intervals, only then should you think of intraday trading. You must be good at technical analysis. There are many technical tools that also help in predicting short term share price movements. Fundamentals play smaller role in intraday trading.

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