Short Term trading v/s Intraday trading: which one is more profitable

 Introduction

Volatility is the basic inherent property of the stock market and to make best of it every investor or trader requires informed and wise decisions. For this purpose traders need to havea strong understanding and knowledge of the various trading methods and techniques along with their repercussions to minimize losses. In a normal trading activity, Short-term trading and intraday trading are two examples of popular trading strategies, each of which presents its own exclusive set of opportunities and challenges. This all-inclusive blog will research into the specifics of these strategies, assessing a variety of topics including taxation, ideas, and essential strategies, amongst other things. Regardless of whether you are a beginner or an experienced trader, this blog will offer you very important information that will surely help you to figure out and successfully find the way in the world of intraday trading and short-term trading.

Understanding short-term trading

Any trader who is involved in the process of buying and selling stocks during a period of time that is measured to be fairly short is generally referred as short-term trading. In this trading technique, traders maintain their positions for a period ranging from a few days to a few weeks. Technical analysis is the key source behind any short-term trading activity, which needs traders to review charts and indicators in order to mark patterns of price fluctuation, trends, and volume analysis. Traders must be proficient and well averred of the latest tools in this kind of trading so that they can generate a good quantum of profits by reading various charts and patterns that are only transient in nature.

There are several advantages and merits to trading on a short-term basis. Obviously, every trader prime target is the opportunity to make money in a short amount of time. Taking advantage of the volatility of the market instead of daily both sides fluctuations and engaging in frequent trades are two strategies that traders can use to generate cash for themselves financially. With that being said, in order to keep up and pace the market volatility with a consistent market monitoring practice, it requires a significant amount of time and effort.

To generate maximum returns in short-term trading, every trader should require a well-defined trading plan that is disciplined and coupled with a strategy for risk management, and entry and exit points that are pre-decided. Moreover, unexpected market news and events play a significant role and also it is not in control Short-term traders should have an exit plan in case of any negative outcome.

Exploring intraday trading

Intraday trading, often known as day trading, involves trading activities inside the same trading day. This type of trading is an alternative to short-term trading. In this technique, buying and selling are simply considered to take place on the same day generally referred as Intraday Trading. Intraday trading is based on market movements and analysis of minute price movement’s i.e. 5 minutes15 minutes, 30 minutes etc during the course of the trading day. This is in contrast to trading that takes place over a shorter time period or for few days.

Intraday traders using their skills and speculation traded in index, options and stocks and closed their positions on the same day so there is no carry forward of trades. For intraday trading every trader who can synchronizes its trading with fast-paced atmosphere, ready to take up and down challenges and who have the time to sit in front of screen for long hours coupled with dedication skills to closely monitor the market movements throughout the day, only attract handsome returns. So this trading technique is not for everyone specially a big no for beginners.

Extremely sound knowledge of Technical analysis including complete understanding of various charts patterns is basis requirement in order to use trading opportunities as opportunities in intraday trading won’t last longer. This is the basic requirement to generate returns in intraday trading. Moreover a disciplined approach to risk management is required by traders, and this strategy includes the creation of tight stop-loss orders in order to limit the possibility of losses. Traders who are well averse in this technique could generate handsome returns on daily basis.

Next, we will delve deeper into the differences between short term trading and intraday trading, discussing factors such as time frame, trading style, and potential risks. It’s a comprehensive understanding of these trading strategies and their suitability for serious investors.

Key differences between short-term and intraday trading

Even though both short-term trading and intraday trading have same properties to earn profits in n a short span of time, if we look precisely we found a huge difference in the two most common trading techniques. As we all know that these two techniques-Intraday and short terms are mostly used by general traders in each part of world so it is utmost important to understand the difference between the same to decide which one to select. Some basic and important points of differences are as under-

1. Time frame: Intraday trading is all about buy and sell or you can say finishing trades within a single trading day means no carry forward of trades. On the other hand short-term trading carries forward trades from a few weeks to a few months. So it is very clear that short-term traders are more concerned in big price movement that usually take place in a longer version of time, whereas intraday traders are more focused in a single day price movements. They don’t want to carry trades even for the next day. So whether their trades are in losses or in profits intraday traders won’t carry their positions and square off on intraday basis. Moreover both techniques require special knowledge and skills of technical analysis but to apply on different time parameters is the main course of distinctions.
2. Trading style: Every trader wants to generate best ROI on his capital. So in a broader sense or you can say in the best possible safe environment, short term trading could be the most preferred choice for on the account of its broader time frame, and detailed and in-depth use of technical analysis. On the other hand, intraday trading is more of riskier version of short-term trading which involves the utilization of indicators and chart patterns too but limited to some extent.
3. The possible dangers: As short term traders carry their positions to some days or some weeks, it is quite obvious that they are more exposed to the volatility of market. Any change in global or domestic scenario would definitely create an impact on their portfolio. Intraday traders are more vulnerable to the unpredictability of the intraday market as they are forced to take decisions on the basis of intraday movements. This speedy response might result in slippage or delays in execution. So overall both intraday and short-term have likes and dislikes as per their inherited properties. Actually, it depends of traders what kind of mindset they have, and what are their risk-taking capabilities. But one thing is very clear intraday traders are required to have different mindsets or to be more precise a quick and sharp response is badly needed to cater to wild price movements. But short-term traders have an advantage of longer time frames regarding volatility.