What it is:
Intraday is another way of saying "within a day" and 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):
Let's assume that during the course of one normal trading day, shares of Stock A open at $5, peak during the day at $7, fall to $4.50 and close at $6 per share. The intraday high for Stock A is $7 and the intraday low is $4.50.
All of the major exchanges supply intraday price charts which enable traders to track price movements of stocks and options in real time. For most exchanges, intraday is between the hours of 9:30 AM EST and 4:00 PM EST.
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.