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Intraday vs Delivery Trading

Intraday vs Delivery Trading

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Intraday trading involves buying and selling stocks within the same trading day, while delivery trading allows you to hold onto your stocks for a longer period. The two choices depend on how long you plan to own the shares. Learn everything about intraday vs delivery trading, and what is difference between intraday and delivery trading in this detailed article.

The Difference Between Intraday and Delivery Trading

Intraday traders focus on technical analysis and short-term trends, while delivery traders use fundamental analysis and longer-term patterns. There are different strategies for trading on the stock market, including short-term transactions and long-term investments. Intraday trading involves making quick buys and sells, while delivery trading involves holding onto investments for a longer period. Understanding the difference between intraday and delivery trading is crucial for successful stock market trading.  

Most investors who are eager to trade must learn the process. With the help of a stock trading platform, it's easy for traders to trade in the stock market without much hassle. Intraday trading refers to the purchasing and selling of stocks on the same day.

Your transaction becomes a delivery trade if the position hasn't squared off that day. Trading strategies change between delivery trading vs intraday.   

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Table of Content

  1. The Difference Between Intraday and Delivery Trading
  2. What is Intraday Trading?
  3. Advantages of Intraday Trading & Disadvantages of Intraday Trading
  4. What is Delivery Trading
  5. What is the Importance of Trading Margins?
  6. What Distinguishes Intraday from Delivery Trading the most?
  7. Basic Differences between Intraday and Delivery Trading

What is Intraday Trading?

Transactions that begin and end on the same trading day are referred to as intraday trading. For instance, you would have earned an intraday trading profit of ₹2000 (₹22,000 - ₹20,000) if you had purchased 100 shares of a company at ₹200 a share and the stock price had increased to ₹220 per share. If the stock price dropped, you would have lost ₹2,000 (₹18,000 - ₹20,000). 

Advantages of Intraday Trading & Disadvantages of Intraday Trading

The advantages and disadvantages of Intraday trading are outlined in the table below.

Advantages

Disadvantages

Intraday trading allows investors to use their capital to make small investments in stocks, potentially leading to higher profits with a smaller investment.You could lose your position the next day if the stock moves against your prediction, leading to unavoidable losses.
Intraday traders can gain from falling stock prices by selling shares they do not possess. They can sell stock early in the day without purchasing it beforehand, then buy it back at a lower price to make a profit.Intraday trading involves not holding onto stocks during important dates such as dividend record days, bonuses, rights issues, or stock splits. Hence, traders don’t get these benefits.
By engaging in intraday trading, traders can detect developing market trends in their initial stages.Continuous monitoring is crucial in intraday trading. Traders must closely observe minute-by-minute market fluctuations, allowing minimal downtime. This process demands considerable time and attention.

What is Delivery Trading

Buying assets and keeping them for a longer amount of time—typically more than one trading day—is known as delivery trading, also referred to as positional trading. After receiving the shares, the investor retains them in their Demat account. For instance, you would sell all 100 shares of ABC Company for ₹350 each, or ₹35,000, if you invested ₹300 in 100 shares, which appreciated to ₹350 each. If the stock price dropped, you would have lost ₹5,000 (₹25,000– ₹30,000), whereas your delivery trading profit would have been ₹5,000 (₹35,000 - ₹30,000).

What is the Importance of Trading Margins?

Understanding the significance of trading margins is essential for traders as it provides them more control over their funds. With trading margins, traders have the potential to enhance their earnings through larger trades. However, this approach carries a higher risk, with the potential for more significant losses.. Consequently, traders need to understand how margins work and effectively manage them to mitigate the possibility of significant financial setbacks.

What Distinguishes Intraday from Delivery Trading the most?

The duration of the holding of the securities is the primary difference between intraday trading as well as delivery trading. While delivery trading entails purchasing and keeping shares for an extended period of time, intraday trading includes purchasing and selling securities during the same trading day. Understanding  the key point for the difference between intraday and delivery trading makes it easy to choose the suitable trading strategy. Let's check some basic differences between intraday and delivery.

Basic Differences between Intraday and Delivery Trading

Here are some of the basic differences in delivery trading vs intraday trading in the stock market. 

Aspect

Intraday Trading 

Delivery Trading

TimeframeSame trading dayMore than one trading day
Settlement of TransactionsExecuted on the same daySettled later
Risk and ReturnHigh riskLess risky
Brokerage FeesTypically cheaper due to higher volumeMay be higher due to fewer transactions
MarginCan opt for margin to increase capitalDoesn't involve the use of a margin
Trading ApproachTechnical evaluation and short-term trendsFundamental research and long-term trends
Tax ImplicationsTaxed as per the tax slab a trader belongs toCapital gain, potentially lower tax rates

Conclusion
Intraday trading involves buying and selling securities within the same trading day, while delivery trading involves holding shares for a longer duration. The comparison between these two trading methods highlights differences in timescale, transaction resolution, risk and return, brokerage fees, margin requirements, trading technique, and tax implications. Downloading a stock trading app can further enhance your understanding of these concepts.

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FAQs on Difference Between Intraday and Delivery Trading

While delivery traders leverage fundamental analysis & long-term trends to invest in firms with significant growth potential, intraday traders utilise a technical assessment and short-term trends to earn quick returns.

While intraday traders attract short-term capital gain, the taxes are around 15% on your trade. For the delivery trade, short-term as well as long-term capital gain taxes are applicable.

Because intraday trading offers the possibility of rapid gains, it can result in higher profits. Nevertheless, the risks associated with it are higher than those of delivery trading, which is comparatively safer but may yield lower profits.

Yes, using margin to increase potential gains or losses is permitted in intraday trading. Delivery trading, on the other hand, does not require the use of margin.

Brokerage fees are usually lower in intraday trading because of the higher volume of transactions. Because there are fewer transactions in delivery trading, brokerage fees may be slightly higher.

Indeed, compared to intraday trading, delivery trading is safer. Prolonged holding of securities lowers exposure to the high volatility of intraday trading while opening up opportunities for long-term gains.