Square Off

Square off means closing an existing open position by taking the opposite trade — selling what you bought, or buying back what you sold short — so that your net exposure in that instrument becomes zero. An intraday trader who bought 100 shares of SBIN at 10 am and sells those 100 shares at 2 pm has squared off the position; only the profit or loss remains.

In Indian markets the term is tied to intraday (MIS) product types. Intraday positions must be squared off the same day; if the trader doesn’t do it, the broker’s risk system does it automatically in the final minutes of the session — typically in the 3:15–3:30 pm window for equities and F&O, with exact timing varying by broker — often with an additional charge per auto-squared position.

Example

A trader shorts one lot of NIFTY futures (75 units) at 25,100 as an intraday trade. At 3:10 pm the price is 25,040 and the system buys one lot to square off, booking 60 points × 75 = ₹4,500 gross profit (hypothetical, before brokerage and charges). Had the trader done nothing, the broker would have force-bought near 3:20 pm at whatever price prevailed — surrendering exit control entirely.

Why it matters

For algo traders, square-off is a hard constraint to design around: every intraday strategy needs an explicit time-based exit rule safely before the broker’s cutoff, because forced square-offs happen at uncontrolled prices with maximum slippage. A time exit is also a strategy parameter worth backtesting — 3:00 versus 3:15 pm exits can change results meaningfully.

In INDfolio AI, intraday strategies include a defined square-off time that is honoured in backtests, paper trading and live automation alike.