intraday-trading

INTRA DAY TRADING & LONG TERM HOLDING

Intraday Trading and Long-term Holding, You get two options to enter the stock market and make money from it. One, you could trade shares using the intra-day trading. Two, you can stay invested in the share market for a long duration to generate high returns.

Both forms of investments are associated with certain pros and cons. You could either hold the shares for years or trade and sell them on the same day you purchased these shares.

Let’s understand both concepts in detail.

How Intra-day Trading and Long-term Holding Differ?

Investment in the share market can be defined as holding the shares of a company for a long period. Usually, people keep these shares for a period of 3-5 years (if they opt for long-term investments). 

Intra-day trading, on the other hand, means you could sell all your shares within the same day. This means you don’t hold on to the shares for days, let alone keeping them for years.

·      Holding Period

As mentioned before, investment and long-term holdings include the shares that are held for many years. The market fluctuations are common in the long-term holdings, but that has no impact on your investment.

Now, you can hold these shares for decades. There is no maximum limit. Intraday trading hours are different. You are supposed to sell all the shares on the same day before the closing period. You hold these shares for a few hours only.

·      Capital Growth

The trader sells the shares as soon as the stock price moves in their desired direction. Let’s say you purchased 10 shares worth INR 100 from a particular company. You sell these shares as soon as the price increases to INR 150.

That way you earn a profit of INR 500 from the sale of 10 shares. If the price of the stock decreases, you could put a stop loss to reduce the amount of loss you bear.

Long-term investments do not involve a quick sale. You don’t sell your shares if its price increases by a small percentage. You rather hold on to that for several years. In other words, the price fluctuations do not affect your long-term investment decisions.

·      Level of Risk

Intraday trading and long-term investments are associated with risk. The risk is higher in intra-day trading since the price fluctuates quickly. You have only a short amount of time to sell the shares. There is high price volatility involved in the intra-day trading as compared to the long-term holdings.

The latter involves risk, but that’s comparatively lower than intra-day trading. Long-term holding gives investors an opportunity to grow their money by earning dividends and making the best of the price appreciation.

·      Investor’s Profile

Timing is everything in intra-day trading. If you fail to track the price of the stock, you will lose the deal. That’s because the price of the shares of any company fluctuates every minute.

Basically, you are supposed to keep an eye on the stock exchanges 24/7 to ensure that you don’t miss the right opportunity. Long-term investors focus on the credibility of the company. The small fluctuations in the price do not make them suffer losses. They stay invested for a longer duration. They keep the shares for many years.

Intraday Trading or Long-term Holding – Which is better?

You could earn significant profits from intra-day trading, but it involves a high level of risk. There is a chance you could end up selling your shares at a lower price by the end of the day.

Long-term investors generate high returns, but there is a risk the company might underperform. So, both types of investments include risk. The best option depends on your risk appetite. 

Gill Broking makes your Share Investment & Trading Experience simple with major exchanges like NSE & BSE.

Open Trading Account Now @ https://www.gillbroking.com/open-an-account/

 

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It is, therefore, important to learn both the pros and cons of intraday trading to get a better idea of how this market works and how exactly you can grow your money. In this post, we will walk you through a few advantages and disadvantages of intraday trading. So, keep reading to learn more.

• Beware of fixed/guaranteed/regular returns/ capital protection schemes. Brokers or their authorized persons or any of their associates are not authorized to offer fixed/guaranteed/regular returns/ capital protection on your investment or authorized to enter into any loan agreement with you to pay interest on the funds offered by you. Please note that in case of default of a member claim for funds or securities given to the broker under any arrangement/ agreement of indicative return will not be accepted by the relevant Committee of the Exchange as per the approved norms.
• Ensure that pay-out of funds/securities is received in your account within 1 working day from the date of pay-out.
• Be careful while executing the PoA (Power of Attorney) – specify all the rights that the stock broker can exercise and timeframe for which PoA is valid. It may be noted that PoA is not a mandatory requirement as per SEBI / Exchanges.
• Register for online applications viz Speed-e and Easiest provided by Depositories for online delivery of securities as an alternative to PoA.

• Do not keep funds idle with the Stock Broker. Please note that your stock broker has to return the credit balance lying with them, within three working days in case you have not done any transaction within last 30 calendar days. Please note that in case of default of a Member, claim for funds and securities, without any transaction on the exchange will not be accepted by the relevant Committee of the Exchange as per the approved norms.

• Check the frequency of accounts settlement opted for. If you have opted for running account, please ensure that your broker settles your account and, in any case, not later than once in 90 days (or 30 days if you have opted for 30 days settlement). In case of declaration of trading member as defaulter, the claims of clients against such defaulter member would be subject to norms for eligibility of claims for compensation from IPF to the clients of the defaulter member. These norms are available on Exchange website at following link: NSE, MCX

• Brokers are not permitted to accept transfer of securities as margin. Securities offered as margin/ collateral MUST remain in the account of the client and can be pledged to the broker only by way of ‘margin pledge’, created in the Depository system. Clients are not permitted to place any securities with the broker or associate of the broker or authorized person of the broker for any reason. Broker can take securities belonging to clients only for settlement of securities sold by the client.

• Always keep your contact details viz. Mobile number/Email ID updated with the stock broker. Email and mobile number is mandatory and you must provide the same to your broker for updation in Exchange records. You must immediately take up the matter with Stock Broker/Exchange if you are not receiving the messages from Exchange/Depositories regularly.

• Don’t ignore any emails/SMSs received from the Exchange for trades done by you. Verify the same with the Contract notes/Statement of accounts received from your broker and report discrepancy, if any, to your broker in writing immediately and if the Stock Broker does not respond, please take this up with the Exchange/Depositories forthwith.

• Check messages sent by Exchanges on a weekly basis regarding funds and securities balances reported by the trading member, compare it with the weekly statement of account sent by broker and immediately raise a concern to the exchange if you notice a discrepancy.

• Please do not transfer funds, for the purposes of trading to anyone, including an authorized person or an associate of the broker, other than a SEBI registered Stock broker.

• Do not deal with unregistered intermediaries (who are not registered with SEBI/Exchanges).

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