However, due to a lack of platform and technology, Nepalese investors are unable to carry out intraday trading. In Nepal, stock buyers do not get ownership of the stocks on the same day due to which they cannot sell them. Moreover, the absence of a platform and counterparty for settlement also makes intraday trading in Nepal impossible.
However, few experienced investors are found to be carrying out intraday natured trading in Nepal too. Apparently, they are earning huge profits in a short span of time by carrying out such trading. It doesn’t mean, the stock traders are doing some illegal stuff. The trading is very much legal. For intraday trading, they are exploiting a procedure called ‘Square off’.
How is intraday trading carried out in Nepal?
The traders, at first, purchase a particular stock at a given price. When the stock is transferred to their accounts, they sell the stocks at a higher price. If the price of the stock falls, they repurchase the same stock at a lower price. The investors keep a close eye on the price fluctuation within a day and make sell and purchase decisions. They also ensure equalizing the number of purchased and sold stock (known as square off) so that their accounts have an adequate number of stocks for ownership transfer in any given day.
What is Intraday Trading?
Intraday trading means buying and selling stocks on the same trading day. Intraday trading is also known as Day Trading. Share prices keep fluctuating throughout the day and intraday traders try to draw profits from these price movements by buying and selling shares during the same trading day. Intraday trading refers to buying and selling stocks on the same day before the market closes.
For such trading, developed stock exchanges avail of intra-day trading features in their TMS. These stock exchanges also avail the list of companies in the option. Investors can not trade all stocks in intraday trading. Only specific stocks with smooth demand and supply are listed in the option.
To carry out intraday trading, investors must be experienced and well-informed. In the international market, experienced investors perform such trading.
In the stock market, long-term investors can make huge profits, however, if done properly and calculatedly, short-term investment also pays off very well. For example; a stock opens a trade at Rs 500 in the morning. Soon, it climbs to Rs 550 within an hour or two. If an investor purchases 1,000 stocks in the morning and sells them at Rs 550, he/she would make an incredible profit of Rs 50,000 within a few hours. In this way, an experienced investor can earn a huge profit from intraday trading.
However, the Nepalese stock market has no such feature. Nevertheless, few experienced investors are carrying out intraday natured trading of their own stocks. First, they sell their stocks and square off within a day by purchasing the same stock. Nepalese investors in a bid to minimize their losses and to earn capital gain are carrying out intraday trading.
What is square off?
Squaring off is a trading style used by investors in which an investor buys or sells a particular quantity of stocks and later in the day reverses the transaction, in the hope of earning a profit.
For example, a person who sells 1000 shares of any given company at a high price and again buys the same stock before the end of the trading session of the day or vice versa is called square off.
In the international market, squaring off is mandatory in intraday trading. If an investor fails to do so, the system will automatically square off the position.
