Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Intraday

What it is:

Intraday refers to price movements of a given security over the course of one day of trading.  It is generally used to describe the high and low price of a stock or option during a given trading day or session.

How it works (Example):

The price of any given security fluctuates over the course of a day. Intraday figures express price movements over the course of a trading day and are usually measured hour-by-hour during trading time. The most important derivation from intraday price movements is the high/low price spread on a given day.

An intraday chart for the price of a given security might look something like this:

Why it Matters:

Intraday price movements and charts are used by short-term traders to determine the correct time to enter or exit a trade. Based upon this analysis, they implement trading strategies and capitalize on short-term price fluctuations.

Intraday strategies are also used to trade options. Option prices don’t change as quickly as underlying stock prices, so traders use intraday prices to identify periods when the option is mispriced relative to the stock.   

Intraday is closely linked with day trading, the practice of buying and selling financial instruments within the same trading day. Many day traders are bankers or investment firm employees. However, since the advent of electronic trading, day trading has become increasingly popular with at-home traders.