Square Off

Square off is the act of closing an open trade by placing an equal and opposite order for the same financial instrument. The practice is especially common in intraday trading, where traders aim to settle all open positions before the market closes to secure profits or minimize potential losses. A trader can square off: A long position (buy first) by selling the same quantity of shares. A short position (sell first) by buying the same quantity of shares. If the trader fails to square off a position by the end of the session, the broker may either carry the position forward to the next trading day or automatically close it. This automatic process can sometimes attract additional brokerage charges or penalties.

Example: Suppose a trader purchases 100 shares of Company X at ₹500 each and sells them at ₹510 later that day. The sale closes the initial position—known as squaring off—and results in a gain of ₹10 per share.