What is Day Trading?

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What is Day Trading?

From this article on “What is Day Trading?” you will get to know about the in-depth details for day trading definition, it’s advantages and disadvantages and also about the margins and taxation implies in this trading.

This blog will be useful for you in a way to get all the detail about the day trading from one article itself.

First of all, we will start with the definition of Day trading:

What is Day Trading?

Day Trading defines the trading that took place within the same day as the positions are taken in place when the market opens and the positions are squared off on the same day before the market closes down.

Intraday trading is done by traders with the mentality to make more money in trading and booking short term profits.

The shares that are bought or sold in intraday trading are not transferred to the Demat account of the trader as the shares or the position get squared off before the market closes down on each day.

These shares or position taken by the traders are only visible to their trading account and not on their Demat account.

These shares required to be squared off before the market closes down by the trader but if in case the trader forgets to square off then the system automatically squared off these position on the behalf of them.

The shares bought or sold by the trader are only available to the trader for just one day and that’s why it is also known as intraday trading.

These trading offered the traders lower margins and brokerage on their transaction.

The main aim for the intraday trading is about the churning of the capital.

Now, further, I am going to state about the execution of intraday trading.

How the trader can execute the Trades in Day Trading?

When you want to trade in the day trading then you need to select the “MIS” option that is especially for the intraday orders.

The trades can be executed from any of the media like an online or offline trading platform.

In this trading type, the shares are visible in the trading account after the execution.

So, this was about the trade execution part now will see the margins you need to pay for the intraday trading.

Which type of margins paid for the trading?

In intraday trading, the trader needs to insert the stop loss and the profit targets when they are punching their trades.

They are also provided with huge leverage in the trading that is structured as the Cover Order.

With this now we will walk ahead with the advantages and disadvantages of Day Trading.

Advantages & Disadvantages

This trading allows to buy the shares with margins and high leveragesIn day trading, you need to monitor the market closely and the time frame is shorter.
The brokerage fees are lowIn day trading, there is no benefit for dividend and also they are not represented as the owners of the company.
This also allows for short selling the shares 
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Now we have reached the final part of the topic that is about Taxation of Day Trading.


The trader for the equity intraday trading needs to file the form of ITR-3 as the income from this trading is considered as the Speculative Business Income.

For this, the trader needs to prepare the financial statements of the balance sheet and the profit & loss account and this is needed to be audited by the auditor.

The due date for filing the ITR is

  • If the tax audit is applicable then the 30th September of the next financial year.
  • If the tax audit is not applicable then the 31st July of the next financial year.

For more details about the taxation, you can read our blog on “Which ITR Form to File for Day Trading?”

With this, we have covered all the important and deep pointers of intraday trading through this article.


From this article that is completely about “What is Day Trading” states about covering the important aspect of intraday trading in the perspective of reader as this is the essential learning for the beginner to know at the start of understanding the Intraday Trading.

With this, I want to conclude the topic that in intraday trading you will also need some expert advice or guidance from the experts of the particular field as in this type of trading there is risk associated with the involvement of the leverage and margins.

So it is always recommended to take the decision for intraday trading only after knowing about intraday trading with complete information.

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