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Finance GlossaryIntraday Trading
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Intraday Trading

Definition of Intraday Trading

Intraday trading refers to the buying and selling of financial instruments within the same day. There is no delivery involved in intraday trading as a result. Equity shares are the most popular instrument for intraday day but commodity options and forex futures trading also make it to the list.

Related Terms

Book To Bill Ratio

Book to Bill ratio is the value you get by dividing the total worth of new orders received by the total worth of orders sold. The formula to calculate Book to Bill ratio is:

Book to Bill ratio: Total worth of new orders received / Total worth of orders billed

Book to Bill ratio helps companies understand the demand and supply for their goods or services. A Book to Bill ratio of more than 1 means that there’s more demand and less supply.

Whereas, a Book to Bill ratio of less than 1 means that there’s less demand and more supply. Using these indicators, the company can work on increasing or limiting production.

Cash and Cash Equivalents

Cash and cash equivalents are short-term assets or holdings which fall under the current assets of a business. Cash and cash equivalents have very high liquidity. When you take the term literally, you have two components:

  • Cash: money like cash holdings in a bank account, petty cash, and others
  • Cash equivalents: assets or investments like T-bills, commercial paper, and others that have a short maturity which can easily be converted into cash

Bought Out Deal

A bought-out deal is a stock offering where an investment bank buys the entire issue of shares from a company. In turn, the investment bank will attempt to sell the shares to other investors. A deal of this kind has two benefits:

  • The company need not worry about subscription as the investment bank will purchase the entire offering
  • The investment bank can negotiate with the company and get the shares at a discount

That said, there are risks to a bought out deal like:

  • It is up to the investment bank to sell the shares to investors in order to recoup the principal or make a profit
  • The investment bank also runs the risk of receiving no interest in the shares from other investors
  • Guarantee purchase

If the issue size of the bought-out deal is large enough, the investment bank may team up with others to fulfil the purchase.

Assets

An asset is anything that has economic value and is owned by an individual, company, or group. Assets are bought to generate returns in the future.

Capital Gain Or Loss

A capital gain is a profit that an investor or trader earns by selling an asset while a capital loss is the money a trader or investor loses after selling an asset. Capital gains are taxed while capital losses can be used to offset gains.

Forex Futures Trading

Forex futures trading is the buying and selling of exchange-traded futures contracts for currency pairs . A forex futures contract gives the holder the right and the obligation to buy or sell a pair of currencies at a predetermined price and date. The important components of forex futures trading include:

  • Forex pair: the currency you will buy in exchange of the other at the end of the futures contract
  • Lot size: the value of the currency included in the contract
  • Contract price: the price at which the futures contract is trading
  • Spot price: the latest forex rate for the currency pair, different from the contract price
  • Margin: the amount of money you’re required to deposit with your currency trading platform
  • Tick size: the minimum amount by which a forex futures contract can move, which is Rs. 0.0025 in India
  • Expiration date: the preagreed day on which the contract must be excercised or squared off

Forex futures trading in India is possible through three exchanges: NSE, BSE, and MSE. The forex futures contracts are standardized derivatives that can be traded between 9.00 AM to 7.30 PM. Forex futures in India are cash settled, meaning profits or losses are settled in INR while the base currency is not delivered.




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