suppose 1st trader does intraday short sell which 2nd trader buyed and after sometime **
** 1st trader cover(buy) share to close trade which 2nd trader sold to close trade
in above case:
share are letterly created from nowhere but have the same impact on price movement like other free floating share
2 ) if the number of trader who will execute trade the same way as above at some point it will exceed the number of free floating share available ?
BIG QUESTION - demand and supply help to find equibilirium but when demand and supply can be created out of nowhere then how it will help in finding equibilirium of the company share
suppose a company have 5000 free floating share and someone name 3rd trader already buy all available share and then this two tade did intrady tade nest day, Important note :- share check buy nse only at end od day for delivery related so trader can trade in a day a s much a s they wanted but because all the share alreay take buy 3rd trader then if share traded intraday it will exceed the total number of avilable share of the company by the amount traded in intradey .
Thats how you get liquidity for the share, for long term investors intraday is making them to buy that at fair price + liquidity. If you totally ban intraday or leverage trading you won’t get good liquidity and price point. Shares are constant but this number of transaction out of thin air makes good pricing possible. In intraday one party makes money other looses in the process as you have to square off at EOD while making the transaction at minute levels possible.
Same buyer will be seller and same seller will be buyer in a single day, in the process creating the price Levels(Bid-ask price), if you take this out of equation only people left would be long term investors who will have wide Spread of Price and low volume( liquidity). Intraday Trading is making the Cash market other wise no one would invest in this .
In India all trades MIS/CNC BUY/MIS SELL (INTRADAY SHORT WITH OUT HOLDING OR BORROWING SHARES) go thro exchange (not thro aggregators /dark pool like in USA).
Sometimes some stocks become BUY OR SELL in CNC only(you can not short sell with out holding stock in DMAT)
for example currently WOCKHARDT, IBREALESTATE, JSL, JSLHISSAR, EQUITAS and many more .