Intraday Vs Positional Trading With An Example

 

1. What is a stock market?

The stock market is a place where people buy and sell small parts of ownership in companies, called "stocks" or "shares". When you buy a stock, you own a tiny portion of the company and can make money if the company does well and its stock price goes up. If you sell the stock later and the price has gone up, you make a profit. If the price has gone down, you may lose money. The stock market is a way for companies to raise money by selling ownership stakes to investors and for individuals to invest their money and potentially make a profit.

The two primary trading options on the stock market are intraday trading and positional trading, and traders can pick between them. Traders have the choice to choose one, both, or neither of the options.

2. Intraday Trading

Intraday trading is a type of trading where a trader buys and sells securities within the same trading day to profit from the price movements of the security within the same day.

For example, let's say a trader believes that the price of a particular stock is going to rise during the day due to positive news about the company or because he or she has done some analysis based on a technical chart. The trader buys 100 shares of the stock for Rs. 50 per share, for a total investment of Rs. 5,000. Later in the day, the price of the stock rises to Rs. 55 per share, and the trader decides to sell the 100 shares for a total of Rs. 5,500. The trader has made a profit of Rs. 500 from this intraday trade.

It's important to note that intraday trading can be risky, as prices can fluctuate rapidly throughout the day. Traders need to be disciplined, have a solid trading plan, and be able to quickly make decisions based on market conditions. It's also important to manage risk by using stop-loss orders and not investing more than you can afford to lose.

3. Top 8 Tips for intraday Trading

Here are some simple, easy and golden rules for Intraday trading to earn handsome profits doing day trade. Follow the rules of Stock venture and never forget to follow them.

4. Positional Trading

Positional trading is a type of trading where a trader holds onto a security for a longer period, typically days, weeks, or even months, to profit from the overall trend of the security over that period.

For example, let's say a trader believes that a particular stock is undervalued and has the potential to rise in price over the next few months due to the strong fundamentals of the company. The trader buys 500 shares of the stock for Rs. 50 per share, for a total investment of Rs. 25,000. Over the next few weeks, the stock price gradually rises to Rs. 65 per share, and the trader decides to sell the 500 shares for a total of Rs. 32,500. The trader has made a profit of Rs. 7,500 from this positional trade.

It's important to note that positional trading requires a longer-term approach and may involve holding onto security through short-term fluctuations in price. Traders need to have a solid understanding of the technical analysis and fundamentals of security and be able to make informed decisions based on market conditions. It's also important to manage risk by using stop-loss orders and not investing more than you can afford to lose.

Here's a simplified table that compares Intraday Trading and Positional Trading, with categories:

Category	Intraday Trading	Positional Trading
Type of Trading	Short-term trading	Long-term trading
Holding period	Same trading day	Days, weeks, or months
Goal	Profit from price movements within a day	Profit from the overall trend over a longer period
Focus	Short-term gains	Long-term gains
Attention required	High	Low
Timing	Trades close within a day	Trades can span days, weeks or months
Risk level	High	Lower
Decision-making	Quick	Informed, based on fundamentals and market conditions
Trading plan	Discipline and a solid plan required	Plan should manage risk and limit losses

Conclusion:

In the end, a trader's objectives, risk tolerance, and level of experience will determine whether they choose intraday or positional trading. Despite the advantages of both approaches, it's crucial to pick the one that best matches your investment preferences and financial goals. 

The art of intraday trading can be learned and perfected by clicking here.