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Buy and sell the same stock on the same day — here's how it actually works.
Intraday trading means buying and selling the same stock within a single trading day — the position never stays open overnight. It's one of the most talked-about ways to participate in markets, and also one of the most misunderstood. This lesson covers how it actually works mechanically, what makes it different from regular delivery-based buying, and why it carries a risk profile most beginners underestimate.
When you place an intraday order, you're buying and selling the same quantity of the same stock before the market closes that day. If you don't manually close the position yourself, most brokers automatically square it off — closing it out — a few minutes before market close, usually around 3:15-3:20 PM IST, whether the trade is in profit or loss.
For example: you buy 100 shares of a stock at ₹500 at 10 AM as an intraday (MIS) order. By 2 PM, the price has risen to ₹510. You sell, booking a ₹1,000 gross profit before brokerage and taxes. If you hadn't sold by 3:15 PM, your broker's system would have auto-squared-off the position at whatever price was available then — you don't get to choose "I'll hold it overnight instead" once it's flagged as intraday.
| Factor | Intraday (MIS) | Delivery (CNC) |
|---|---|---|
| Position closes | Same day, mandatorily | Whenever you choose to sell |
| Shares in demat | Never actually credited to your demat account | Credited to your demat account after settlement |
| Leverage | Brokers commonly offer several times your capital | Typically none — you pay the full amount |
| Auto square-off | Yes, near market close if not closed manually | No such requirement |
Brokers typically let intraday traders control a much larger position than their actual capital, often 5x-20x depending on the stock and broker. This magnifies both gains and losses proportionally.
For example: with ₹10,000 capital and 5x leverage, you can take a position worth ₹50,000. A 2% move in your favor earns ₹1,000 — a 10% return on your actual capital. But a 2% move against you loses the same ₹1,000, also a 10% loss on your capital, just from a small price move. Leverage doesn't create profit — it multiplies whatever the underlying price move already was, in either direction.
Intraday trading involves brokerage on both the buy and sell leg, STT, exchange transaction charges, GST, and SEBI turnover fees — on every single trade. A trader making several trades a day pays these costs repeatedly, and they can quietly consume a meaningful share of gross profits, especially on smaller trades where the price move itself is modest.
Intraday trading requires reading price action in real time, managing a strict stop-loss without hesitation, and staying unemotional through fast, leveraged swings — all within the same trading session. It also demands consistent time during market hours, which most people with a full-time job or other commitments simply don't have. Combined with leverage amplifying every mistake, this is why intraday trading has a reputation for being far harder to consistently profit from than it looks from the outside.
Key Takeaway: Intraday trading means squaring off a position within the same day, usually with leverage that magnifies both gains and losses. Positions never reach your demat account, and brokers auto-square-off anything left open near market close. The combination of leverage, repeated transaction costs, and the need for constant attention during market hours makes it a fundamentally different — and riskier — activity than regular delivery-based investing.
Your broker will auto-square-off the position shortly before market close, typically around 3:15-3:20 PM IST, at the prevailing market price — regardless of whether it results in a profit or loss.
You still need a trading and demat account to place any equity order, but since intraday shares are never actually credited to your demat account, the position exists only within the trading day.
Yes — intraday equity trading is generally treated as speculative business income for tax purposes, taxed at your slab rate, rather than as capital gains, which follow the rules covered in the mutual fund taxation lessons. It's worth consulting a tax professional for your specific situation.
It varies by broker and stock, commonly ranging from 3x to 20x, and is also subject to exchange and regulatory margin requirements that can change — always check current leverage limits on your specific broker's platform.
Some brokers allow converting an MIS position to CNC before the auto-square-off cutoff, provided you have sufficient funds to cover the full delivery value, but this isn't guaranteed on every platform.
It's generally difficult, since intraday trading requires monitoring positions actively during market hours (9:15 AM to 3:30 PM IST) — most people balancing other commitments find delivery-based investing far more practical.
Disclaimer: This article is for general educational purposes only and does not constitute personalized financial, investment, tax, or legal advice. Figures, rates, and rules mentioned may change over time — verify current details with an official source or a qualified professional before making financial decisions.