It refer to trade of securities that traders only hold during the regular business hours and close at the end of the trading day. Such kind of trade is called intraday position. The intraday traders pay close attention even on little price movement of market in an attempt to get benefit from short price fluctuations. The intraday position involves numerous trading strategies, these include:
- Range trading – in this type of trading, traders pays close attention on major support and resistance levels to take buy and sell decision.
- Scalping – it is widely used strategy by many traders. Through this strategy, traders attempt to generate numerous small profit from small price movements throughout the day. Scalping involves great number of trades with small profit throughout the day.
- High frequency – in this strategy, traders use sophisticated procedures to exploit short or small term market inefficiencies.
- News based trading – this strategy involves with high impact. Traders usually wait for the time to release high frequency news and take decision on the basis of new impact on market.
The intraday position involves both pros and cons for traders. Some of them are as follows.
Pros:
- No risk of overnight loss
- Great number of trades thought the day with small profit
- Tight stop loss
- Access to increased leverage due to regular trades
- Learning experience due to great number of trades
Cons:
- Commission cost may be more due to great number of trades.
- Consume lot of time, to analyses market movements