What is Intraday Trading? Rules, Timings, and Basics
Summary Box
Intraday trading [also called day trading or MIS (Margin Intraday Square-off)] is the practice of buying and selling the same stock or security within the same trading day. This process ensures that neither a position is carried overnight nor any physical delivery of shares takes place in your demat account.
In intraday trading, the clock is as important as the price chart. A trade may offer a profit opportunity in the morning, but the same position cannot be carried into the next trading day.
Besides the need for compulsory square-off, intraday trading also involves several rules related to margin requirements, leverage, square-off, short-selling restrictions, and more. If you are looking to attempt intraday trading in 2026, read this article to first learn what intraday trading is, how it works, and its market timings. Also, learn about MIS orders and check out some major intraday trading rules.
What is Intraday Trading?
Intraday trading is the technique of buying and selling a financial security on the same trading day. The trader does not intend to keep the position overnight. Consequently, a trade opened during market hours must be closed before the intraday trading session ends.
For example,
- Suppose an investor buys 100 shares of Company A at ₹500 each at 10:00 a.m.
- The total trade value is ₹50,000.
- If the share price rises to ₹510, the investor can sell the 100 shares on the same day.
- The potential profit is ₹1,000 [(₹510 – ₹500) × 100 shares], before applicable charges and taxes.
Note that the “reverse” of such a situation is also possible, which is known as “Short Selling”. A trader can first sell shares short and then buy them back at a lower price before the market closes. This process also qualifies as “intraday trading”. For example,
- Suppose shares are first short-sold at ₹500.
- Later (before the market close), the same shares were bought back at ₹490.
- In this case, the gain is ₹10 per share (₹500 – ₹490).
What Happens to the Shares in Intraday Trading?
In a normal delivery trade, shares bought by an investor are transferred to the investor’s demat account after settlement. They can then be held for days, months, or years.
Intraday trading works differently. Since the buy and sell transactions are completed within the same trading day, there is no delivery of shares to the demat account. The position is closed before the day ends, and the resulting profit or loss is reflected in the trading account after applicable charges.
Several traders engage in intraday trading through MIS orders. In the next section, let’s understand what they are.
What is MIS (Margin Intraday Square-off) in Intraday Trading?
MIS (Margin Intraday Square-off) is a type of order/product offered by brokers for intraday trades. MIS orders are specifically designed for positions that are intended to be closed on the same trading day. Besides, this financial product also offers “leverage”, which allows traders to take larger positions with minimal upfront capital.
Let’s understand better through an example:
- Suppose a trader has ₹1,000 in trading capital.
- They operate on Trade246 and enjoy a leverage of up to 500X margin on an eligible intraday trade.
- Now, the trader could take a position worth up to ₹5,00,000, subject to the applicable terms and margin requirements.
- The trader must close the MIS position within the same trading day.
For more clarity, let’s check out some key features of MIS orders:
| Feature | Explanation |
|---|---|
| Position Closure | An MIS order/position is meant for intraday trading, so the trader must close the position on the same trading day. It is not intended for overnight holding. |
| Auto-Square-Off | If the trader does not close the MIS position within the broker’s specified cut-off time, the broker may automatically square off the position. The exact cut-off time can vary by broker and may be earlier than the market’s official closing time. |
| Leverage | MIS orders allow traders to take a larger position than their available cash alone would permit by using margin. |
| Market Volatility and Risk Controls | The amount of leverage available can change based on market conditions, the security, and the broker’s risk controls. During periods of high volatility, a broker may reduce available leverage or change its square-off rules to manage risk. |
What are the Latest Intraday Trading Timings in India?
For equity shares on NSE and BSE, both regular and intraday trading takes place from 9:15 AM to 3:30 PM on trading days. Besides, the “pre-open session” runs from 9:00 AM to 9:15 AM and is primarily used for order collection and price discovery.
NSE’s pre-open process includes order entry from 9:00 AM to 9:08 AM, order matching from around 9:08 AM to 9:12 AM, followed by a short transition period before normal trading begins. (Source: NSE India)
Let’s understand the intraday market schedule in detail:
| Session | Time (IST) | What Happens |
|---|---|---|
| Pre-Open Session | 9:00 AM to 9:15 AM | Orders are collected and matched to determine the opening price. In this phase, the normal continuous trading has not started. |
| Normal Trading Session | 9:15 AM to 3:30 PM | Regular intraday trading takes place on the equity market. Orders are matched during continuous trading. |
| Market Close | 3:30 PM onwards | The normal equity market closes at 3:30 PM. |
(Source: NSE India – Market Timings)
3 Intraday Trading Rules Every Trader Should Know
To regulate intraday trading, SEBI has provided several additional rules related to placing limits on margin collection, short selling, and institutional trading. Let’s check them out:
01Margin/ Leverage Rules
SEBI requires brokers to collect prescribed margins from clients before providing exposure. In the cash market, VaR (Value at Risk) and ELM (Extreme Loss Margin) are among the margins that must be collected upfront.
Additionally, SEBI has also provided guidelines related to “peak-margin”, which checks the margin available against the client’s positions at multiple points during the trading day. This prevents a trader from taking a large position with insufficient margin and then adding funds only after the position has been checked.
(Source: SEBI Circular – SEBI/HO/MIRSD/DOP/CIR/P/2020/173)
02Square-Off Rule
Realize that intraday positions (opened by placing MIS orders) cannot become overnight positions. An MIS position is intended to be closed on the same trading day. The 3:30 PM time represents the end of normal equity market trading on NSE and BSE. But it does not mean every broker waits until exactly 3:30 PM before closing MIS positions.
As per general industry practice, brokers can:
- Specify an earlier cut-off and
- May automatically square off open intraday positions before the market closes
The exact timing depends on the broker and its risk-management policy. For example,
- Suppose a trader buys shares through an MIS order at 11:00 AM.
- They leave the position open.
- Now, the broker may close it automatically “before 3:30 PM”.
In such a situation, the trader may also have to pay applicable auto-square-off charges.
Therefore, an intraday trader should check the broker’s stated square-off time rather than assume that 3:30 PM is the personal deadline.
03Intraday Trading Rules Related to Short Selling
SEBI permits both retail and institutional investors to “short sell” in the financial markets, subject to the applicable rules. However, institutional investors are not permitted to square off their transactions intra-day. Their transactions are grossed at the custodian level, and their obligations are fulfilled on a gross basis. However, in an intraday trade, retail traders can short-sell shares.
(Source: SEBI Circular – SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/1)
“Naked Short Selling” is Not Permitted in India’s Securities Market
Naked short selling means selling a stock without owning it or having the necessary arrangement to obtain the shares for settlement. In India, SEBI permits short selling, but it requires investors to honour their obligation to deliver the securities at settlement.
Therefore, a trader cannot simply sell shares short and leave the resulting delivery obligation unfulfilled. For this purpose, SEBI also provides the Securities Lending and Borrowing (SLB) mechanism. Through this process, a trader can borrow shares from another market participant and use those shares to meet the delivery obligation created by a short sale.
(Source: SEBI Circular – SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/1)
Let’s understand naked short selling better through an example:
- Suppose a trader short sells 100 shares of Company A at ₹500 (without owning those shares).
- Later, the transaction creates a delivery obligation.
- Now, the trader must have a valid way to fulfil that obligation, such as obtaining the shares through the SLB mechanism.
- If the trader instead sells the shares without having the ability to deliver them at settlement, it would amount to naked short selling, which is not permitted by SEBI.
Note that this is different from a “retail intraday short sale”. In this process, the trader sells first and buys back the same quantity during the trading day, thereby closing the position. As a result, the trader does not carry the short position into the delivery settlement.
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So, now you know what intraday trading is, its market timings, and how it works. You also learnt about MIS orders, their role in intraday trading, and their key features. If we were to revise, intraday trading is the practice of opening and closing a position within the same trading day, rather than carrying it overnight.
The regular equity trading session (also applicable to intraday trading) on both NSE and BSE runs from 9:15 AM to 3:30 PM. Some important intraday trading rules to remember are:
- Margin: Prescribed margins apply, while leverage varies by security and broker.
- Square-Off: MIS orders/positions must be closed within the same trading day.
- Short Selling: Retail traders can short sell, subject to applicable SEBI rules.
- Naked Short Selling: It is not permitted, and traders cannot create a delivery obligation without the ability to fulfil it.
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Intraday Trading FAQs
1. What if the trader does not close the MIS position on the same trading day?
2. How is income from intraday trading taxed in India?
3. What are the charges applicable to intraday trading?
4. Is intraday trading suitable for beginners?
Risk Warning: Trading in financial instruments carries a high level of risk to your capital and the possibility of losing more than your initial investment. Trading in financial instruments may not be suitable for all investors and is only intended for people over 18. Please ensure that you are fully aware of the risks involved and seek independent advice if necessary. Past performance is not indicative of future results.