Short answer: Stock trading means buying and selling shares of listed companies to earn money from changes in their prices. It usually happens over shorter periods than long-term investing, and sometimes within a single day. Profits cannot be guaranteed, and a trader can lose money if prices move against them.
Last reviewed: 12 November 2026
At a glance
| Term | What it means |
|---|---|
| Stock trading | Buying and selling shares to earn from price changes, usually over shorter periods |
| Demat account | An account where shares are held electronically |
| Intraday trading | Buying and selling the same stock within one trading day, with positions closed before the market closes |
| Scalping | Making many very short trades, sometimes hundreds a day, each aiming for a small profit |
| Fundamental analysis | Studying a company’s financial statements, management, growth prospects and industry |
| Technical analysis | Studying past price movements and trading volumes using charts and indicators |
What does a stock trader actually buy and sell?
A share is a small unit of ownership in a company. Companies that are listed trade their shares on stock exchanges, such as the National Stock Exchange (NSE) and the BSE in India. A trader buys shares at one price and sells them at another, so the profit or loss comes from the gap between those two prices.
A trader does not need to own the business for long. The goal is to benefit from how the share price moves in the period they hold it.
What do you need before you can trade?
You need a demat account, short for dematerialised account. In this account, your shares are held electronically rather than as paper certificates. When you buy shares, they are added to your demat account. When you sell, they are removed from it.
Your demat account is the record of what you hold. Without one, you cannot receive shares from a purchase or deliver them from a sale.
What is intraday trading, and why does it matter?
Intraday trading, also called day trading, means buying and selling the same stock within a single trading day. Traders close these positions before the market closes, so the shares are never delivered to the demat account. The trader’s profit or loss is settled in cash.
This is a useful distinction. If you buy shares and hold them past the market close, the shares appear in your demat account. If you square off the position the same day, they do not.
What is scalping, and what is the catch?
Scalping means making a large number of very short trades, sometimes hundreds per day. Each trade aims for a small profit from tiny price changes. The idea depends on many small gains adding up.
The catch is that many small losses add up in the same way. Consider this hypothetical example, with numbers invented for illustration:
- 100 trades in a day. 60 trades earn ₹20 each, which is ₹1,200.
- 40 trades lose ₹40 each, which is ₹1,600.
- Net result: a loss of ₹400.
Even with more winning trades than losing ones, the total can still be negative. The example ignores charges, which this article does not cover.
How do traders decide what to buy or sell?
Traders generally use one of two approaches, or a mix of both. Fundamental analysis evaluates a company’s financial statements, its management, its growth prospects and its industry. The question it asks is what the business is worth.
Technical analysis studies historical price movements and trading volumes, often using charts and indicators, to forecast where prices may go. It asks how the share has behaved and what that pattern suggests. Both methods rely on judgement, and neither removes the risk that the trader has read the situation wrongly.
What does a simple worked example look like?
Here is a hypothetical example with round numbers invented for illustration. Suppose a trader buys 100 shares at ₹500 each, a total of ₹50,000.
- If the trader sells all 100 shares at ₹510 each, the sale brings ₹51,000. The gain is ₹1,000, before charges.
- If the trader sells all 100 shares at ₹490 each, the sale brings ₹49,000. The loss is ₹1,000, before charges.
The same trade can end in a gain or a loss, depending on which way the price moves after the purchase. The example shows only the price difference and does not represent any actual market.
What are the main risks?
Trading carries significant risk. The largest risk is losing money by miscalculating market trends. A trader who expects a share price to rise may see it fall, and the loss is real even if the trader was confident beforehand.
Frequent trading adds more chances to be wrong. Scalping, for example, multiplies the number of decisions, and each decision carries its own risk. Profits cannot be guaranteed under any method.
Frequently asked questions
Is stock trading the same as investing?
No. Stock trading aims to earn from changes in share prices, usually over shorter periods. Long-term investing is generally held over longer periods.
Do I need a demat account to trade shares?
Yes. Shares are held electronically in a demat account, and buying or selling moves them into or out of that account.
Does intraday trading mean I receive the shares?
No. Intraday positions are squared off before the market closes, so the shares are not delivered to your demat account.
Can stock trading guarantee profits?
No. Trading carries significant risk, including potential losses from miscalculating market trends.
Sources and last check
Facts in this article were checked against the sources below on 12 November 2026. Rules and figures can change; check the primary source before acting.
- upstox.com (broker education)
- groww.in (broker education)
- kotakneo.com (broker education)
- icicidirect.com (broker education)
This article is general information, not investment advice. MyFinanceBandhu is not a SEBI-registered investment adviser.