SML-173: Squaring Off a Position Squaring off means closing an open trade by doing the opposite trade. After that, you hold no position in that share. How it works: If you bought first (long): You square off by selling. If you sold first (short): You square off by buying back (SML-171). Example (illustration only): You buy 100 shares at ₹200 and later sell them at ₹205. Gross profit: ₹500. You sell 100 shares at ₹205 and later buy them back at ₹200. Gross profit: ₹500. Brokerage, STT and other charges are extra (SML-168, SML-169). Open and closed positions: Open position: The trade is not closed yet. Profit or loss is unrealised and changes with the price. Squared off: The trade is closed. Profit or loss is final (realised). Square-off in intraday trading: Intraday positions must be closed on the same day (SML-156). If you do not close them, your broker usually squares them off automatically near market close. The broker can close at any price available at that time, and may charge a fee for it. Square-off in F&O: Futures and options positions can be closed before expiry. Check your broker's expiry rules. Some positions may settle by physical delivery, which needs money or shares in your account. Partial square-off: You can close only a part. For example, if you hold 100 shares, you can sell 40 and keep 60 open. Caution: Do not hold an intraday loss hoping it will recover. The broker's auto square-off may happen at a worse price. Use a limit order if the price matters to you, and a market order if exiting fast matters more (SML-157, SML-158). If a stock hits a circuit or has low liquidity, you may not be able to square off (SML-165, SML-104). Square-off means two trades, so charges apply on both. Intraday profit or loss is generally treated as speculative business income for tax. Key takeaway: Squaring off means closing a trade with an opposite order. Plan your exit before you enter, so the market does not choose it for you.