The stock market is a trading platform for legal claims of ownership, otherwise called stocks, making profits from change in value of currencies. Intraday trading is a variation of stock market exchange where any deals being done have to be closed before a day ends. Valuables exchanged in these types of trade are not sums of money but financial items or securities. In business money is a financial item that is considered the lowest rank because it does not have potential on its own, it can’t change. Other financial items include options, futures, contracts, assets, etc. The nature of these other financial items is what makes a complicated system like the stock market possible. Transactions like that used to only be done by banks or big companies since they’re the only people who had access to financial items other than cash.
Many securities exist, the ones that can get used for stock market exchange are options and futures. Options are what get traded the most in these kinds of platforms because, in the list of financials, they hold the most value. They’re government contracts that permit you to do except that it does not necessarily obligate you; that’s why they can be exchanged from one person to another. Accessing them is hard and that’s why they have value, people who have them already trade them to anyone interested. Executing what is in an option’s contract is not easy since it requires resources that’s why once it is traded there’s an endless chain of exchange. The value remains the same, a changing currency value is what makes a profit to people that sell it.
Online platforms that deal with trade of this nature do not give out the contracts to reduce the cost of operation on their side and also to make things easier. They’ll give signatures for a short while so that you know an option belongs to you and you’re authorized to trade. In intraday trading options are not sold like a normal good, they use a business technique called leverage. Leverage is any means that opt to use indebt instead of cash. What that means is you don’t buy the option from your pocket but with cash borrowed from a middle man.
The time of repayment expires within a day that’s why it’s called intraday. What goes on is that there are brokers all over the platform, a limited number, from whom you can borrow cash. The reason why they do that is to avoid taxation and bank transfer charges. Money is borrowed from a broker to buy a security which in our case is the option. When that option is bought, you have to give it to the broker so that they’re assured you can repay what you owe. The technique is called margin trading and it is where you pay twice for a good because you’re buying with borrowed cash.
In this case, you’ll give what you bought to the broker as collateral so that you don’t have to pay twice the amount. Collateral in business is something you give when taking a loan to assure your commitment to repaying and if you don’t make payments within the agreed time, your collateral is auctioned. A better way of doing this is loaning money for buying something. That something that was bought the bank holds until you find a customer to buy it. After selling, they take their money back and give you the profits. That’s how these intraday trading platforms operate except that there are no banks involved, only a company with several securities to be exchanged. Something else that is done when intraday trading involves futures.
A future in business terms is just an agreement that you will sell a security at a specific time in the future no matter the situation. This is often considered gambling but it is more complex than that. They’ll take advantage of the uncertainty of the future an example being something like the stock market, it might have gone up or gone down. An agreement is signed called a future containing terms that include you selling a security at a specific time in the future. Profiting from it or getting a loss is considered a gamble. Futures strike good profits for companies that participate in it and what’s interesting is governments don’t even know.
For deals involving securities other than cash, laws of most countries require parties to have licenses. With many online platforms offering that service, it is now free and governments don’t watch you. All that explained, intraday trading majorly deals with options and futures, it is like social media but people there trade the two securities. Deals have to be closed before a day and cash is borrowed from a broker to buy an item. The broker takes that item on hold and you have to sell it before the day ends or interest will be charged on the cash you loaned for carrying a deal to the next day.