What is intraday trading in NSE & BSE?
Investors are of two types. There are long-term investors who believe that an investment in a stock has to be made for the long-term and for several years. Such investors follow a buy-and-hold strategy. It is usual for such investors to keep stocks in their portfolio for several years and even decades.
On the other hand, there are a number of investors who are short-term traders. Such investors believe in the merits of intraday trading. They prefer to buy the stock and square it off on the same day, netting whatever profit or loss is there in the transaction.
What are the advantages and disadvantages of intraday trading?
The advantages is that the investor or trader knows what profit he has made or loss that he suffered in the same day. Such traders are content with the small percentage changes that the stock reflects in the course of the day.
The other advantage is that the trader is not subject to the risks that may happen in the future. Several risks are unforeseeable by the trader. If an event happens overnight which changes the fundamentals of a stock or of the economy, it can have a drastic effect over the stock market.
The disadvantage is that the trader loses out on the heavy gains that accrue to the stock over a period of time.
Under the principles of compounding, a stock can grow to an enormous amount over a period of several years. In fact, this is how the principle of multibagger stocks has evolved. Stocks grow to several times the moneys invested in them and they get characterized as multibaggers.
(Rakesh Jhunjhunwala’s guide on how to do intraday trading)
What is the brokerage payable for intraday trading
Most brokerages charge a nominal brokerage for intraday trading. Brokerages like Motilal Oswal, Kotak Securities, IIFL, Religare etc charge upto 0.15% of the transaction value.
Other brokerages like RSKV and Zeroadha do not charge brokerage for intraday trading and charge a nominal amount for delivery based transactions.
Both systems of trading, whether long-term or short-term have their own set of risks. Stock markets are prone to great volatility. The stock prices can go up or down in a dramatic manner. If the investor does not have the staying power, he can suffer huge losses.