Thousands of traders seek to make profits in the stock market every day. But stock trading is not everyone’s cup of tea, and losing money seems to be a lot easier than booking profits. So, investors apply intraday and interday trading strategies to make the best use of their resources.

A trading strategy is chosen on the basis of the investor’s risk appetite and investment horizon. The choice also depends on the type of security the investor wants to deal with. Each of these trading strategies has different rules.

Intraday Vs. Interday Trading: Everything You Should Know

Basics of intraday trading and interday trading

Intraday trading relates to trades being settled in a single trading day. In contrast, interday trading involves trading that takes place over more than a single day. Both these trading techniques are short-term trading strategies. So, they focus on short-term trades.

However, the two strategies are distinguished by their respective approaches towards trading, time horizons, and risk profiles.

Before you start trading, it is essential to open a trading account with a broker like Kotak Securities. Now, you can decide on your goal and set the trading strategy accordingly.

Differences between intraday and interday trading

In case of intraday trades, the trading horizon is much shorter and usually lasts a couple of hours. Here, investors buy securities after the market opens and square off the position before it closes. For this reason, it is popularly known as day trading.

Interday trading has a longer trading horizon. The securities are held overnight and even for a few days. Traders following this strategy select stocks based on fundamental analysis.

Facts to consider

Intraday trading is widely chosen by investors looking to make quick profits from small fluctuations in stock prices. They make profits on opening and closing stock prices. The accessibility of margin loans makes it a lucrative trading strategy. A day trader can easily fetch up to 10x leverage compared to an interday trader.

Benefits of intraday trading

  • By using margin loans, you can purchase shares without paying the full price.
  • Brokerage charges are lower for intraday trades as opposed to interday trading.
  • Intraday trading allows you to short-sell stocks and earn profits without owning them.

Drawbacks of intraday trading

  • Whether the company performs well or not, you should sell the shares within the same trading day.
  • You need to closely monitor the market as well the company you have invested in. Any event-driven factors can impact the stock price.  
  • To make substantial earnings, you need to purchase a large volume of shares.

Tailpiece

Are you looking to reap profits as quickly as possible? In that case, it’s advisable to go for intraday trading. The goal is to gain a little on each trade and then compound those over time. On the other hand, interday trading is about more than analysing the movement of stock prices. It requires a lot of research as well as fundamental analysis.  So, this type of trading would be suitable for you if you have the patience to accrue profits over time.

Remember, one trading style is not better than the other. Everything depends on the trader’s mindset and circumstances.