Well trading in stock market is dealing with buying/selling a
company share/equity(not limited only to equity) over stock
exchange market through a broker listed on stock exchange.
We say trading is Intraday or Day trading if any Stocks or Options or Currencies is bought
and sold or vice verse on the same day before market is closed.
Day trading is also known as speculation as well ,speculation is nothing but doing trade
of securities (Stocks/Option/Currencies/Bonds/Derivatives etc.) in order to book profit
on same day.Day trading is highly risky as well as highly rewarding .
Intraday trading is basically done by specialist in who has knowledge that the price of
a share is going to shoot sharply today.Reason of share/stock price shoot can be any
good news about the company such as nice quarterly earning and profit or huge dividend
has been announced by the company.
Such traders are know as day traders or intraday traders or Speculators.
Demonstration of day trading :
Say for example today after market opened,at 10:00 AM hrs I bought 1000 equity share of a
company ABZ Inc.at price of $10 per share and sold at price of $11 per share before
market closing hours.
So calculated profit booked for the day shall be :
Bought 1000 equity share @ $10
Cost price = 1000*10 => $10000
Sold 1000 equity share @ $11
Sold price = 1000*11 => $11000
So booked profit for the day =Selling Price -Cost Price
=$11000 -$ 10000
=$1000
We can see that in a day trading we have made $1000 profit,but booking $1000 is not so easy as
we sold share at $1 profit/share which is 10% upward movement of share price that generally
does not happen unless any good news about company has spread into the market .
Vice Versa of Booking profit in day trading:
We can book profit by selling stock at higher price and then buying it back at lower price before
market closed.Before we do that we must have to ensure that the price of stock is going to fall
due to some bad news about the company such as bad quarterly earning and poor profit etc.
Say for example today after market opened,at 10:00 AM hrs I sold1000 equity share of a
company ABZ Inc.at price of $10 per share and bought at price of $9 per share before
market closing hours.
So calculated profit booked for the day shall be :
Sold 1000 equity share @ $10
Selling price = 1000*10 => $10000
Bought back 1000 equity share @ $9
Buy price = 1000*9 => $9000
So booked profit for the day =Selling Price -Buy Price
=$10000 -$ 9000
=$1000
We can see that in a day trading we have made $1000 profit.
Related : What is Margin Trading in Stock Market ?
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