Intraday trading, a global stock market strategy, involves buying and selling securities within a day to profit from short-term price movements. This study explores how technological evolution and service innovation influence investor behavior in adopting intraday trading in Nepal’s stock market. Utilizing survey data from 226 respondents in Kathmandu Valley, the study employs Structural Equation Modeling (SEM) to analyze behavioral biases, including heuristics, prospect theory, market conditions, and herding effects. The findings reveal that herding behavior significantly impacts trading decisions, as investors heavily rely on external information from peers and social media rather than fundamental analysis. Unlike developed markets where heuristics and prospect behaviors dominate, these factors exhibit minimal influence in Nepal, reflecting a unique market environment shaped by limited financial literacy and regulatory inefficiencies. Additionally, the study identifies major structural challenges, such as technological limitations in the Trading Management System (TMS), inadequate brokerage support, and lack of investor awareness, which hinder effective trading participation. The results indicate that 80.09% of traders prefer intraday transactions, while 61.06% express interest in broker-provided facilities. Despite the growing appeal of intraday trading, inefficiencies and regulatory gaps persist as major challenges. The study recommends enhancing financial literacy, improving NEPSE’s technological infrastructure, and implementing regulatory reforms to facilitate a more efficient and transparent trading environment. Future research should explore demographic variations in trading behavior, compare Nepal’s market with similar economies, and assess the impact of digital financial innovations on intraday trading adoption.
